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e> 





MATERIALS FOR THE STUDY 
OF BUSINESS 


Materials for the Stu y of Business 


Industrial Society. By Leon C. Marshall. 1,082 pages, cloth, 
$4.50, postpaid $4.65. 

Financial Organization of Society. By H. G. Moulton. 790 pages, 
cloth, $4.00, postpaid $4.12. 

Principles of Accounting. By Albert C. Hodge and J. O. McKinsey. 
390 pages, cloth, $3.00, postpaid $3.10. 

Law and Business. By William H. Spencer. 3 vols., cloth, $4.50, 
postpaid $4.62 each. 

Vol. 1. Introduction. 612 pages. Vol. II. Law and the 
Market. Law and Finance. 670 pages. Vol. III. Law 
and Labor. Law and Risk-Bearing. Law and the Form 
of the Business Unit. 654 pages. 

Business Administration. By Leon C. Marshall. 920 pages, cloth, 
$4.00, postpaid $4.12. 

Education for Business. By Leverett S. Lyon. 618 pages, cloth, 
$3.50, postpaid $3.60. 

Social Studies in Secondary Schools. By a Commission of the 
Association of Collegiate Schools of Business. 114 pages, 
boards, $1.00, postpaid $1.10. 

Forms, Records, and Reports in Personnel Administration. Edited by 
C. N. Hitchcock. 162 pages, paper, $1.75, postpaid $1.79. 

Recent British Economics. By D. H. MacGregor, R. Lennard, and 
J. A. Hobson. 134 pages, boards, $1.50, postpaid $1.60. 

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Curtice N. Hitchcock, and Willard E. Atkins. 948 pages, 
cloth, $4.50, postpaid $4.65. 


IN PREPARATION 


The Technique of Business Commu¬ 
nication. 


Labor. 

The Physical Environment of Business. 
Psychological Tests in Business. 
Dumping: A Problem of International 


The Manager’s Administration of 


Managerial Accounting. 
Commercial Cost-Accounting. 


The Manager’s Administration of 
Finance. 


T rade. 

Social Control. 

Overhead Costs in Industry. 


The Place of the Market in Our Eco¬ 
nomic Society. 


THE UNIVERSITY OF CHICAGO PRESS 

CHICAGO, ILLINOIS 








THE WORKER IN MODERN 
ECONOMIC SOCIETY 


THE UNIVERSITY OF CHICAGO PRESS 
CHICAGO, ILLINOIS 


THE BAKER & TAYLOR COMPANY 

NEW YORK 


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LONDON 

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TOKYO, OSAKA, KYOTO, FUKUOKA, SENDAI 

THE MISSION BOOK COMPANY 

SHANGHAI 






THE WORKER IN MODERN 
ECONOMIC SOCIETY 


BY 

PAUL H. DOUGLAS 
CURTICE N. HITCHCOCK 

AND 

WILLARD E. ATKINS 




THE UNIVERSITY OF CHICAGO PRESS 
CHICAGO, ILLINOIS 


, Lrurw-x. 













.Hi* 


Copyright 1923 By 
The University of Chicago 


All Rights Reserved 


Published July 1923 


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Composed and Printed By 
The University of Chicago Press 
Chicago, Illinois, U.S.A. 


C1A711406 


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AA& S 


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do 





EDITOR’S PREFACE 


Collegiate training for business administration is now so widely 
attempted that the time has arrived when experiments should be 
conducted looking toward the organization of the business curriculum 
into a coherent whole. Training in scattered “business subjects” 
was defensible enough in the earlier days of collegiate business training, 
but such a method cannot be permanent. It must yield to a more 
comprehensive organization. 

There can be no doubt that many experiments will be conducted 
looking toward this goal; they are, indeed, already under way. This 
series, “ Materials for the Study of Business,” marks one stage in such 
an experiment in the School of Commerce and Administration of the 
University of Chicago. 

It is appropriate that the hypotheses on which this experiment is 
being conducted be set forth. In general terms the reasoning back 
of the experiment runs as follows: The business executive administers 
his business under conditions imposed by his environment, both 
physical and social. The student should accordingly have an under¬ 
standing of the physical environment. This justifies attention to 
the earth sciences. He should also have an understanding of the 
social environment and must accordingly give attention to civics, law, 
economics, social psychology, and other branches of the social sciences. 
His knowledge of environment should not be too abstract in character. 
It should be given practical content, and should be closely related to 
his knowledge of the internal problems of management. This may be 
accomplished through a range of courses dealing with business admin¬ 
istration wherein the student may become acquainted with such mat¬ 
ters as the measuring aids of control, the communicating aids of 
control, organization policies and methods; the manager’s relation 
to production, to labor, to finance, to technology, to risk-bearing, 
to the market, to social control, etc. Business is, after all, a pecuni¬ 
arily organized scheme of gratifying human wants, and, properly 
understood, falls little short of being as broad, as inclusive, as life 
itself in its motives, aspirations, and social obligations. It falls 
little short of being as broad as all science in its technique. Training 
for the task of the business administrator must have breadth and 
depth comparable with those of the task. 

vii 


EDITOR’S PREFACE 


vui 

BASIC ELEMENTS OF THE BUSINESS CURRICULUM 

Of problems of adjustment to 
physical environment 

a) The earth sciences 

b) The manager’s relationship 
to these 


Control 

1. Communicating aids of control, 

for example 

a) English 

b) Foreign language 

2. Measuring aids of control, for 

example 

a) Mathematics 

b) Statistics and accounting 

3. Standards and practices of con¬ 

trol 

a) Psychology 

b) Organization policies and 
methods 


Of problems of technology 

a) Physics through mechanics, 
basic, and other sciences 
as appropriate 

b) The manager’s administra¬ 
tion of production 

Of problems of finance 

a) The financial organization 
of society 

b) The manager’s adminis¬ 
tration of finance 

Of problems connected with the 
market 

a) Market functions and mar¬ 
ket structure 

b) The manager’s administra¬ 
tion of marketing (including 
purchasing and traffic) 

Of problems of risk and risk¬ 
bearing 

a) The risk aspects of modern 
industrial society 

b) The manager’s administra¬ 
tion of risk-bearing 

Of problems of personnel 

a) The position of the worker 
in modern industrial society 

b) The manager’s administra¬ 
tion of personnel 

Of problems of adjustment to 
social environment 

a) The historical background 

b) The socio-economic insti¬ 
tutional life 

c) Business law and govern¬ 
ment 




EDITOR’S PREFACE 


IX 


Stating the matter in another way, the modern business admin¬ 
istrator is essentially a solver of business problems—problems of busi¬ 
ness policy, of organization, and of operation. These problems, great 
in number and broad in scope, divide themselves into certain type 
groups, and in each type group there are certain classes of obstacles 
to be overcome, as well as certain aids, or materials of solution. 

If these problems are arranged (i) to show the significance of the 
organizing and administrative, or control ; activities of the modern 
responsible manager, and (2) to indicate appropriate fields of train¬ 
ing, the diagram on the opposite page (which disregards much over¬ 
lapping and interacting) results. It sets forth the present hypothesis 
of the School of Commerce and Administration concerning the basic 
elements of the business curriculum, covering both secondary school 
and collegiate work. 

This present volume deals with the position of the worker in 
modern industrial society. 


L. C. Marshall 


I 






t 















































- 











- 




















AUTHORS’ PREFACE 

This book is the outgrowth of a three years’ experiment in teaching 
courses in the field of industrial relations at the School of Commerce 
and Administration of the University of Chicago. It differs from 
the ordinary textbook on labor problems in two salient respects: 
first, it attempts to cover a wider scope by emphasizing both the 
psychological and the underlying industrial aspects of the modern 
situation, while knitting together the various problems into a more 
or less unified and organic whole; second, it is a book of readings, 
with selections from different sources, rather than a re-writing of 
them at second-hand. The selections finally included represent the 
winnowing of a truly considerable amount of material. As a result 
of continuous classroom experimentation and mutual criticism, we 
have discarded from three to four times the material here presented 
besides fundamentally modifying the scope and nature of the subjects 
treated. 

It should not be thought, however, that the sequence of topics 
which we have followed need be slavishly copied by every instructor 
who uses the book. Thus chapter iv, “Glimpses of Other Types 
of Organization,” might logically be discussed as illustrative material 
for the psychological analysis given in Part One. Again, the study 
of Part One itself might be postponed until after Part Two on the 
historical development of industry had been completed, or the stu¬ 
dent might be asked merely to read Part One thoroughly and then 
to interpret the issues raised later in the book from this as well as 
from other viewpoints. The sequence of chapters in Parts Three 
and Four may easily be modified to suit the convenience of the instruc¬ 
tor or the needs of particular classes. By means of cross-references, 
an effort has been made to emphasize the interdependence of the 
whole subject and to make possible a flexible assignment of material. 
To provide yet further for flexibility, as well as to stimulate outside 
reading, a few selected references for further reading have been placed 
at the end of virtually every chapter. Finally, by means of a series 
of problems attached to every chapter, we have attempted to raise 
issues which will compel the student to think carefully over the 
material he has read. The instructor may well require these problems 
to be read in advance of each chapter. 


XI 


AUTHORS’ PREFACE 


• • 

Xll 

We have sought to guard against the two chief dangers which 
the use of such a book of readings may present. The first and more 
important is that the student may come to be satisfied merely with 
it and neglect the original sources. We hope that the selections we 
have given from such writers as the Webbs, Commons, Hoxie, and 
other authorities may stimulate the student to seek further acquaint¬ 
ance with them. The instructor should promote this by the assign¬ 
ment of term or other periodical reports which will demand extensive 
outside reading. The second defect we have sought to overcome is 
that of undue choppiness of content, and to that end we have grouped 
our material into seven main parts and have sought to integrate the 
selections within each part. Our purpose has been to furnish a basis 
for examining the whole modern economic scheme from certain 
special points of view rather than to present a series of labor “ prob¬ 
lems ” as isolated aspects of that scheme. 

The fundamental theory upon which the work has been con¬ 
structed is that a student secures an infinitely more vivid and real 
understanding of the industrial problems of today, if he is placed 
in contact with the basic researches in the field of labor, and if upon 
controversial issues, the protagonists of the conflicting interests are 
allowed to speak for themselves, than if these are worked up and 
given to him in the usual textbook fashion. And if it be objected 
that the immature student is frequently confused by the citation of 
conflicting authorities, we can but reply that a neatly symmetrical 
and predigested set of materials is admirably adapted to perpetuating 
such a student in his immaturity. In the mental struggle which a 
student should go through in evaluating such different approaches to 
life as this book seeks to present, he will attain a greater maturity 
and vision. If such is indeed not the effect, it will have failed of its 
purpose. 

We have profited greatly from the co-operation of our colleagues 
and of our friends. Dorothy W. Douglas assisted in gathering the 
material for, and giving final form to, Part Five, and in addition 
assisted in preparing the material for two other major parts of the 
book. Professor L. C. Marshall, Dean of the School of Commerce 
of the University of Chicago, has given his unfailing assistance and 
painstaking and effective criticism. Our colleague Professor H. A. 
Millis has been good enough, in addition to generous advice, to permit 
us to use some selections which he has used with his classes. Miss 
Penn Shelton has saved us many weary hours of labor by running 


AUTHORS’ PREFACE 


Xlll 


down sources and verifying references. Miss Elinor Pancoast assisted 
in compiling the tables at the end of chapter vi, and in finding material 
for certain sections of Part Three. The kindness of the authors and 
publishers in giving us permission to reprint their writings has, of 
course, alone permitted the production of this book and we wish to 
take this occasion to thank them. We are indebted to so many 
others for their criticism of certain portions of the manuscript that 
we cannot thank them all by name, but we are especially grateful to 
Professor Jacob Viner, Professor E. S. Robinson, Mr. A. W. Korn- 
hauser, and Miss Mildred Janovsky, of the University of Chicago, 
Professor Paul F. Brissenden, of Columbia University, Professor 
Frank T. Carlton, of DePauw University, Professor John R. Com¬ 
mons, of the University of Wisconsin, Professor Theresa S. MacMahon, 
of the University of Washington, Professor A. B. Wolfe, of the Uni¬ 
versity of Texas, and Mr. Carl Hookstadt, of the United States 
Bureau of Labor Statistics. 

But while our friends by their help have made this a much better 
book than it otherwise could have been, we alone are responsible for 
its errors and its faults. 

Paul H. Douglas 
Curtice N. Hitchcock 
Willard E. Atkins 


June 8, 1923 























« 
























■ 












" 3 



































« 











CONTENTS 

PART ONE 

HUMAN NATURE AND INDUSTRY 

PAGE 

Introduction. 3 

Chapter I. Human Nature and Evolution 

A. Introductory 

1. The Great Society. Graham Wallas . 7 

2. The Economist’s Concern with Human Nature. Rexford G. 

Tugwell .10 

3. What a Study of Human Behavior Involves. John B. Watson 12 

B. Glimpses of Social Change 

4. The Meaning of Human Evolution. Vernon Kellogg . . 14 

5. How Civilization Changes. A. A. Goldenweiser .... 16 

6. The Influence of Tools on Man’s Development. 0 . G. S. 

Crawford .18 

Problems on Chapter i.21 

Chapter II. Some Important Aspects of Human Behavior 

1. Sources of Human Energy 

a) The Energies of Men. William James .24 

h) Mental Aspects of Fatigue. Frank Watts .26 

2. The Nature and Importance of Habit 

a) The Functions of Habit. William James .28 

h) Habit in Social Life: the Folkways and Mores. W. G. 
Sumner .29 

3. Three Types of “Emulation.” C. H. Cooley .31 

4. The “Herd” Tendencies in Industry. Frank Watts ... 33 

5. The Nature and Function of Rational Thought 

a) The Nature of Judgment. John Dewey .36 

h) Reason as a Guiding Force. E. L. Thorndike .... 39 

c ) How Our Desires Influence Our Reason. W. F. Ogburn . 42 

6. Individual Differences 

a) Differences in General Character and Intelligence. Irwin 

Edman .44 

b ) Differences in Special Capacities. Bernard Muscio . . 46 

c) An Intelligence Rating by Occupations. Memoirs National 

Academy of Sciences .48 

Problems on Chapter ii 50 

. xv 













XVI 


CONTENTS 


Chapter III. Theories of Human Nature as Tools for Under¬ 
standing Industrial Relationships page 

1. Human Behavior in Terms of Wish-Fulfilment. Thos. D. Eliot 53 

2. A Psychological Analysis of Industrial Unrest. Carleton H. 

Parker . 59 

3. Human Nature as a Product of Training and Environment 

a) Nature Less Important than Nurture. W. C. Mitchell 64 

h) Changing Human Nature. John Dewey .65 

Problems on Chapter iii.69 

References for Further Reading. 7 ° 

PART TWO 

THE DEVELOPMENT OF ECONOMIC ORGANIZATION 

Introduction . 75 

Chapter IV. Glimpses of Some Diverse Types of “Work-Organi¬ 
zation” 

1. The Greek Artisan. Alfred Zimmern .77 

2. The Siberian Convict. Fyodor Dostoievsky .80 

3. American Slave Economy. John Elliot Cairnes .... 83 

4. The Economic Society of the Incas. William H. Prescott . 85 

5. A Glimpse of Production in the Handicraft Period 

a) The Emergence of “Industry” in the Twelfth Century. 

W. J. Ashley .89 

h) The Control of Craft Industry. L. F. Salzmann ... 90 

c) An Appraisal of Apprenticeship. E. Lipson .... 91 

d) Church Authority and the “Just Price.” W. J. Ashley . 94 

Problems on Chapter iv.97 

Chapter V. The Worker and the Coming of Capitalism 

A. The Transition 

1. The Beginnings of the Revolution.101 

2. The New Differentiation of Classes. George Unwin . . . 103 

3. Subsequent Changes in the Internal Organization of Industry. 

John A. Hobson .105 

4. The Advent of the Machine 

a) The Great Inventions. L. C. A. Knowles .108 

b ) Occupational Estimates of English Population in 1688 and 

1769. John A. Hobson .no 

c ) English Population in Mining and Manufacturing Areas, 

1851-1901. Arthur L. Bowley .m 

d) Population of England and Wales, 1700-1911. Census . 112 














CONTENTS 


xvii 


/ 

/ 


«/ 


B. The Worker and the New Technique 

Skill and the Machine 

a) Science Succeeds Rule of Thumb. Karl Marx 

b) The Iron Man. Arthur Pound . 

Some Indirect Effects of Machine Technique 

a) The Reign of Standardization. Thorstein Veblen . .. 

b) The Influence of Mechanical Communication. C. H. Cooley 
The Change in the Life of the Operative 

a) The Hand-Loom Weaver. S. J. Chapman .... 

b) The New Industrial Town of the Early Nineteenth 

Century. JL. and Barbara Hammond .124 


PAGE 

112 

ii5 


119 

120 

121 


C. The Worker and the New Commercial Organization 

8. The Commercial Revolution and Population 

a) The Drift to the Towns. L. C. A. Knowles . . . . 126 

b) Shifts in Occupational Groups. John A. Hobson . . . 127 

9. The New Capitalism 

a) The Meaning of an International Market. J. M. Keynes . 129 

b) Wanted—A New Terminology. Ramsay Muir . . . 132 


D. The Change in Social Ideas 

10. The Reign of Laissez Faire. J. L. and Barbara Hammond . 136 

11. The Growth of State Action and Voluntary Association. 

J. F. Rees .139 

12. American Social Ideas during the Last Half-Century. C. E. 

Merriam .140 

13. The Influence of Science on Social Ideas. Winterton C. Curtis 143 

Problems on Chapter v.145 

References for Further Reading.149 


Chapter VI. Economic Development in America 


A. The American Heritage 

1. The Influence of the American Frontier. F.J. Turner . . 150 

2. Immigration and the Development of the Capitalistic Spirit in 

America. Werner Sombart .154 

3. American Political Presuppositions. A. C. McLaughlin . . 155 

B. The Development of American Industry 

4. Transportation and Communication 

a) A Survey of the Effects of Transportation Development. 

Senate Committee Report .158 

-b) The Influence of the Railway on the Lives of the Working 

Population. Selected .160 











XV111 


CONTENTS 


5. Changes in Economic Structure page 

a) The Difficulties of Early Industry. Malcolm Keir . . 161 

b) The Development of the Steel Industry. Malcolm Keir . 164 

C. A Typical Industrial Case 

6. The Boot and Shoe Industry. Blanche Evans Hazard 

a) The Stages of Growth.-.167 

b ) Characteristics of the Early Industry.169 

c) Changes in Machinery and Processes.172 

d ) Capital Invested, Output, and Number of Workers 

Employed.174 

/ D. Modern Occupational Groups: A Statistical Analysis 

v 7. Economic Classes in the United States. Alvin H. Hansen . 176 

8. A Classification by Sex.182 

9. A Classification by Residence: Urbanization.183 

10. Changes in Size and Organization of Industries . . . .184 

11. Changes in Farm Tenure, Size, and Organization . . . . 187 

12. Racial Elements in the American Population, with Especial 
Attention to Wage-Earners 

a) The Negro Population. W. S. Rossiter .188 

b) The Trend of Immigration.189 

c) An Analysis of the Old and New Immigration. Jeremiah 

W. Jenks and W. Jett Lauck .190 

Problems on Chapter vi.194 

References for Further Reading.197 

PART THREE 

THE WORKER IN HIS RELATION TO THE MARKET 
Introduction.201 

Chapter VII. Market Factors and Forces 

A. Introduction 

1. A Glimpse of the Origins of the Wage System. C. N. 

Hitchcock .203 

2. The Partial Maintenance of “Status.” Henry Clay . . . 208 

B. Bargaining Factors 

3. The Meaning of “Wages.” Henry Clay .212 

4. “Labor” Distinguished from Commodities. Henry Clay . . 214 

5. For What Does the Employer Pay ? 

a) Wages versus Labor Cost. James Gunnison . . . . 215 

b) The “Economy of High Wages.” J . A. Hobson . . . 216 

c) Some Attempts to Define “Skill” and “Worth.” Frank J. 

Becvar and R. M. Hudson .219 
















CONTENTS 


xix 


C. Underlying Market Forces 

6. The Higgling of the Market. Sidney and Beatrice Webb 

7. Does “Individual Bargaining” Still Exist? New Republic 

8. The Leveling Force of the Machine. Arthur Pound . . 

9. The Influence of the Business Cycle. W. C. Mitchell . . 

xo. Immigration and the Labor Market 

a) An Official View. Immigration Commission 

b) An Organized Labor View. John Mitchell .... 

Problems on Chapter vii. 

Chapter VIII. A Survey of Wage Theory 


PAGE 

222 

2 26 ^ 
228 
23O 

232 

234 

236 


A. Some Systematic Wage Theories 

1. The Subsistence Theory of Wages. David Ricardo . . . 239 

2. A Statement and Criticism of the Wage-Fund Theory. Francis 

A. Walker .241 

3. The Influence of the Older Theories. Sidney and Beatrice 

Webb .244 

4. The Residual Claimant Theory. Francis A. Walker . . . 247 

5. The Marginal Productivity Theory. Thomas N. Carver . . 249 

6. Some Assumptions of the Productivity Theory. Henry Clay 256 


B. Standards of Wage Adjustment 

7. The Question of Equity in Economic Remuneration. Edwin 


Cannan .258 

8. The War-Time Search for “Standards” . A. M. Bing . . 262 

9. The Irrational Nature of Wage Differentials. H. B. Drury . 265 

10. Standards in Wage Revision. Leo Wolman .266 

Problems on Chapter viii. 269 

References for Further Reading.271 


Chapter IX: Standards of Living: The Distribution of Wealth 
and Income : Wages and Earnings 

A. Standards of Living 

1. A Description of Standards of Living. Dorothy W. Douglas 

a) Definition of Standard of Living.272 

b) Historical Development of Budgets.274 

^2-.- Changes in the Cost of Living, 1913-1922. Monthly Labor 

Review .287 

3. The Problem of Variations in Size and Composition of the 

Family.288 

B. The Distribution of Wealth and Income 

4. The Distinction between Wealth and Income.290 

5. The Distribution of Wealth in Different Countries. W. I. 

King . 


291 













XX 


CONTENTS 


6. The Distribution of Wealth in Massachusetts at Different page 

Periods. W. I. King ..292 

7. The Probable Distribution of Income in England in 1906. 

L. G. Chiozza-Money . . . ..292 

8. A Study of the Total National Income in the United States. 

National Bureau of Economic Research .294 

C. Wages and Earnings 

9. Weekly Earnings and Yearly Income. Collated from various 


sources 

a) The Period 1900-1915.298 

b) The Period 1915-1919.300 


c ) Average Annual Earnings in Selected Industries . . . 306 

10. Wages in Relation to the Cost of Living and the Product of 
Industry 

a) The Relative Movement of Real Wages, 1890-1918. P. H. 

Douglas and Francis Lamberson .307 

b ) Relative Real Yearly Incomes of Wage-Earners, 1909-1919. 

National Bureau of Economic Research .313 

c) Labor’s Share in the Increased Productivity of Industry. 


George Soule . 313 

11. Some Effects of Low Wages.317 

Problems on Chapter ix.319 

References for Further Reading.323 


Chapter X. Women’s Work and Wages 

1. The Number and Distribution of Women Gainfully Employed 

in 1920. United States Women’s Bureau .324 

2. Women’s Wages in the United States. C. E. Persons . . 325 

3. Women’s Wages Since the War 

a) Wages and Hours of Labor in 1919. P. H. Douglas . . 332 

b) Wages and Hours in Rhode Island. United States Women’s 

Bureau .333 

c ) Wages in Kansas. United States Women’s Bureau . . 336 

d) Wages and Hours in Georgia. United States Women’s 

Bureau .336 

4. Principles of Fixing Women’s Wages. Mrs. Sidney Webb . 339 

5. The Dependents of Women Workers. B. S. Rowntree and 

F. D. Stuart . 342 

6. A Minimum Budget for Working Women in 1919. Dorothy W. 

Douglas .345 

Problems on Chapter x.346 

References for Further Reading.347 



















CONTENTS 


xxi 


Chapter XI. Hours of Labor 

A. General Aspects P4G£ 

1. The Movement toward Shorter Hours.348 

2. The Eight-Hour Day Versus the Eight-Hour Basic Day. 

Metal Trades Review . . .350 

B. Arguments for and against Shorter Hours 

3. The Citizenship Argument for a Shorter Day 

a) An Illustration of the Effects of the Long Day. Interchurch 

World-Movement .351 

b) Mr. Gompers’ Argument. Samuel Gompers . . . .353 

4. A Reduction of Hours an Increase of Wages. Ira Stewart . 353 

5. Shorter Hours and Unemployment. Samuel Gompers . . 356 

6. The Effect of Shorter Hours upon Production 

a) Mr. Gompers’ Argument. Samuel Gompers . . . . 357 

b) An American Experiment. Ethelbert Stewart . . . . 357 

c ) The British War-Time Experience. British Health of 


Munition Workers Committee .358 

d) An Investigation by an American Employers’ Association. 

National Industrial Conference Board .361 

Problems on Chapter xi . . . *.362 

References for Further Reading.364 

Chapter XII. A Wage Case 

1. The Bituminous Coal Award of 1920 


A. The Majority Report. H. M. Robinson and R. Peale . . 366 


B. The Minority Report. John P. White .374 

Problems on Chapter xii.' . . . 383 

PART FOUR 
SECURITY AND RISK 

Introduction.387 

Chapter XIII. General Considerations 

1. Securities in Modern Achievements and Methods. Willard E. 

Atkins .388 

2. The Imminence of Fear. W. L. M. King .392 

Instability of the Modern Worker. Frank Tannenbaum . . 393 

4. Fear as a Breeder of Warfare. W. L. M. King .... 395 

5. The Risks of the Worker.395 

Problems on Chapter xiii.397 

Chapter XIV. Accidents 

1. Extent of Industrial Accidents 


a) General. W. J. Lauck and Edgar Sydenstricker ... . 401 

















XXII 


CONTENTS 


b ) Fatal Industrial Accidents. The Prudential Life Insurance 

Company . 

c ) Distribution of Injuries. Massachusetts Industrial Accident 

Board . 

d) Duration of Disability. Massachusetts Industrial Accident 

Board . 

e) Cost of Accidents in 1919. Federated American Engineering 

Societies . 

2. Effect of Accidents on Wages. Robert M. Woodbury . 

3. Consequences of Industrial Accidents. W. J. Lauck and 

Edgar Sydenstricker . 

4. Causes of Accidents 

a) Fatigue. Monthly Labor Review . 

b) Interdependence. Crystal Eastman . 

c) The Spirit of the Game. Crystal Eastman .... 

d) Violation of Rules. Crystal Eastman . 

5. The Common Law and Accidents 

a) The Fellow Servant Doctrine. 205 Illinois Reports 206 

b) Assumption of Risk. 29 Connecticut Reports 548 . 

c ) Contributory Negligence. 231 Pennsylvania State Reports 

585 .•. 

6. Early Workmen’s Compensation Legislation. 201 New York 

271 . 

7. Provisions of Workmen’s Compensation Acts. United States 

Bureau of Labor Statistics . 

8. Merits of Different Insurance Systems. Carl Hookstadt . 

9. Shortcomings in Workmen’s Compensation 

a) Effect of Weekly Maximum. Carl Hookstadt 

b) Administration and Politics. Carl Hookstadt 

c) Rating Methods and Lack of Experience. National 
Workmen’s Compensation Service Bureau .... 

d) Attention to Rehabilitation. Will J. French 

e) Lacks in Compensation. Royal Meeker . 

10. Accident Prevention. Lee K. Frankel and Alexander Fleisher 
Problems on Chapter xiv. 


PAGE 

402 

402 

403 

403 

404 
407 

407 

408 
411 

411 

412 

4 1 3 

414 

415 

416 
421 

423 

424 

425 

426 
426 
428 
430 


Chapter XV. Occupational Disease and Sickness 

1. Occupational Diseases and Workmen’s Compensation Acts. 

Carl Hookstadt . ( . 434 

2. Sickness among Wage-Earners. American Association for 

Labor Legislation .436 

3. Possible Savings from Health Supervision. Federated Ameri¬ 
can Engineering Societies . 439 















CONTENTS 

4. Responsibility for Disease 

a) Working, Living, and Community Conditions. Illinois 

Health Insurance Commission . 

h) General Health and Industrial Fatigue. Eugene Lyman 
Fisk . 

5. Carriers for Insuring against Wage Loss. American Associa¬ 
tion for Labor Legislation . 

6. Organization of Medical Aid under Health Insurance. 

Woodward and Warren .. 

7. Arguments against Health Insurance 

a) Dangerous in Principle. P. T. Sherman . 

b) Does Not Reduce Sickness. National Industrial Conference 

Board . 

8. Health Insurance as a Preventive Measure. John R. Commons 

9. Compulsory Health Insurance. Minority of the Illinois 

Health Insurance Commission . 

10. Health Insurance in Great Britain. Edith Abbott .... 
Problems on Chapter xv. 

Chapter XVI. Old Age 

1. Prevalence of Old Age Poverty. Massachusetts Commission 

on Old Age Pensions . 

2. Cost of Indifference to Old Age. Abraham Epstein . 

3. Old Age, Poverty and Modern Industry. Pennsylvania Com¬ 
mission on Old Age Pensions . 

4. Methods of State Insurance for Old Age. Ohio Health and 

Old Age Insurance Commission . 

5. Some Objections to a Non-Contributory System. M. B. 

Hammond . 

Problems on Chapter xvi. 

Chapter XVII. Unemployment 

1. Definition of Unemployment. Percy Alden . 

2. Fluctuations in Unemployment 

a) Unemployment in the United States, 1902-17. Hornell 

Hart . 

b) Massachusetts, New York and Wisconsin. Ernest R. Brad¬ 
ford . 

c ) Unemployment and the Business Cycle. United States 

Bureau of Labor Statistics . 

3. Seasonal and Intermittent Unemployment 

a) Extent. John Koren and others . 

b) The New York Garment Industries. N. I. Stone . 

c) Intermittent Employment. John Koren and others . 


xxm 


PAGE 

440 

442 

443 

445 

446 

447 
449 

451 

452 
458 


460 

463 

465 

466 

469 

47 i 


472 


472 

475 

479 

480 

484 

485 


















XXIV 


CONTENTS 


io 




d) Comparative Unemployment in the United States, Great 
Britain, and Germany. International Labor Conference 

4. Effects of Unemployment 

a) Some Social Effects. John L. Gillen . 

b) Cumulative Effects. Joseph L. Cohen . 

c ) Chronic Underemployment. J. H. Willits . 

5. Trade Union Reaction to Unemployment. D. P. Smelser 

6. Causes of Unemployment 

a) Industrial Causes. Joseph L. Cohen . 

b) The Reserve of Labor. W. H. Beveridge 

c) Some Constant Causes. W. M. Leiserson . 

d) The Textile Industry. J. H. Willits . 

7. Lack of Elasticity of Working Hours. W. H. Beveridge 

8. Unemployment and Credit. John R. Commons 

9. Immigration and Unemployment. Federated American 

Engineering Societies . 

Suggested Modes of Action 

a) Unemployment and the Business Cycle. Federated Ameri¬ 
can Engineering Societies . 

b) Long-Range Planning of Public Works. President’s 

Conference on Unemployment . 

c ) Employment Exchanges. Federated American Engineering 

Societies . 

d) Public Employment Exchanges in the United States. 

United States Employment Service . 

The Employer and Unemployment Compensation. B. See- 
bohm Rowntree . 

Unemployment Insurance. W. H. Beveridge . 

13. Unemployment Relief Measures in Great Britain 

a) The British Unemployment Insurance Act. Joseph L. 

Cohen . 

b) Trade Unions under the British Act. Clarence H. 

Northcott . 

c) Unemployment Cases under the British Act. Joseph L. 

Cohen .- . 

Some Difficulties in Unemployment Insurance. I. M. 
Rubinow . 

The Cleveland Guaranty Plant. The Cleveland Board of 

Referees . . . 

Problems on Chapter xvii. 

References for Further Reading. 


11 


12. 


14 


i 5 


PAGE 

486 

486 

487 

488 

489 

491 

492 

494 

495 

497 

498 

499 


500 

501 

504 

505 

506 

507 


508 

5 ii 

5 1 3 

514 

515 
5 i 7 
520 


e 

















CONTENTS xxv 

PART FIVE 

THE WORKER’S APPROACH TO HIS PROBLEMS 

PAGE 

Introduction .523 

Chapter XVIII. American Trade Unionism: Causes and 
History 

A. Reasons for the Existence of Unions 

1. Economic Protection. John Mitchell .524 

2. A Functional Classification of Unions. R. F. Hoxie . , . 527 

B. Historical Development of Unionism in the United States 

3. General Forces at Work in the Development of Unions. John 

R. Commons .532 

4. The Knights of Labor 

a) Origin. G. G. Groat .538 

b ) The Knights of Labor and the American Federation of 

Labor. William Kirk .541 

c) Negotiations in 1886. Commons et al; George E. McNeill 547 

5. The American Federation of Labor 

a) General Nature. Helen Marot .549 

b ) Structure. American Federation of Labor Proceedings, 1921 551 

6. The Railway Brotherhoods 

a) Organization and Policies. Helen Marot .552 

b) Important Common Features of the Brotherhoods. E. C. 

Robbins .553 

7. The Amalgamated Clothing Workers.554 

8. The I.W.W. 

a) Preamble to the Constitution.555 

b) The I.W.W. Speaks for Itself.556 

c ) Attitude toward the A.F. of L. Paul F. Brissenden . . 558 

d) The Decline of the I.W.W. R. F. Hoxie .560 

e) Fleeting Character of Membership. Paul F. Brissenden . 561 

9. The Growth and Extent of Trade Unionism 

a) A Quarter-Century of Growth in America. G. E. Barnett . 562 

b) Organization by Industries in 1910. Leo Wolman . . . 562 

c ) Distribution of Union Membership among Occupational 

Groups. G. E. Barnett .563 

d) World-Wide Growth Since 1910. International Labor Office 564 

Problems on Chapter xviii.565 

References for Further Reading.567 

Chapter XIX. Union Structure and Organization 
1. A Classification of Trade Unions by Structure 

a) Types of Union Structure. G. D. H. Cole .568 

b) Some Federations of Unions. R. F. Hoxie .569 

















XXVI 


CONTENTS 


2. Craft Versus Industrial Unionism page 

a) Craft and Industrial Unions. Helen Marot .570 

b ) Some Arguments for Industrial Unionism. G. D. H. Cole 576 

c ) Amalgamation Proposal for the Railway Unions. William 

Z. Foster .577 

d) Economies Effected by Industrial Form of Organization. 

William Z. Foster . 579 

e) The Amalgamation of Related Trades. Theodore W. 

Glocker . 579 

/) Local Trade Councils. William Kirk .584 

3. The Workshop as the Local. G. D. H. Cole .584 

4. The Internationals’ Control of the Locals. G. E. Barnett . 586 


5. City Federations of Labor 

a) Their Field of Action. William M. Burke .586 

b) Some Shortcomings. William M. Burke .587 

e) Present Subordination to the National Unions. G. E. 

Barnett . 588 

Problems on Chapter xix. 590 

References for Further Reading.593 


Chapter XX. Union Policies and Methods 

1. Trade Unions as Agencies for Collective Bargaining. Samuel 

Gompers .594 

2. The Standard Rate 

a) A Statement by the Webbs. Sidney and Beatrice Webb . 595 

b) The Union Rate and Actual Wages. David A. McCabe . 596 

c) Rate Grouping by Competency. David A. McCabe . . 598 

d) The Normal Working Day. Sidney and Beatrice Webb . 600 

3. The Closed Shop 

a) Closed Shop Defined. National Association of Manufac¬ 


turers .601 

b) The Rights of the Unorganized. National Association of 

Manufacturers .602 

c ) Closed Shop and Open Shop Terminology. Paul Studensky 603 

d) The “Open” Shop as Operated by Anti-Union Manu¬ 
facturers. Savel Zimand .609 

e) Mr. Dooley on the Open Shop. F. P. Dunne .... 610 

/) The Ethics of the Closed Shop. Paul H. and Dorothy 

Douglas .611 

4. The Strike 

a) Definition and Nature. T. S. Adams and H. L. Sumner . 612 

b) The Course of Strikes in the United States, 1881-1921. Paul 

H. Douglas .613 

c) Loss Occasioned by Strikes and Lockouts. C. W. Doten . 620 















CONTENTS 


XXVll 


PAGE 

d) Legal Aspects. T. S. Adams and H. L. Sumner . . . 624 

e) A Court Decision. 120 Fed . 102 .628 

/) The Battle-Line of Organization and of Strikes. (Heber 

Blankenhorn, Harry W. Laidler, George P. West, Inter church 

World Movement, Luke Grant .629 

Problems on Chapter xx.636 

Chapter XXI. Union Policies and Methods —Continued 

1. The Union Label. E. R. Spedden .640 

2. The Boycott 

a) Beginnings of the Boycott in America. H. W. Laidler . 642 

h) Definitions and Classification of Boycotts. H. W. Laidler 643 

c) Methods of Boycotting. H. W. Laidler .645 

d) Functions of the Boycott. Leo Wolman .646 

e) The Danbury Hatters’ Case. H. W. Laidler .... 646 

/) Attitude of the Courts toward Boycotting Prior to the 

Clayton Act. H. W. Laidler and J. W. Bryan . . . 648 

g ) Nature and Purposes of the Injunction. Various Writers 653 

h) An Actual Injunction. Superior Court, Suffolk County, 

Massachusetts .654 

i ) Proper Bounds for the Use of the Injunction in Labor 

Disputes. J. W. Bryan .655 

3. Restriction of Entrance to the Trade 

a) Difficulty of Training Boy Workers. F. T. Carlton . . 657 

b ) Extent of Apprenticeship Limitations. F. T. Carlton . 657 

c ) The Helper and Trade Union Policy. John H. Ashworth . 658 

d) The Apprenticeship Problem among the Printers. George 


E. Barnett .659 

4. The Exclusive Right to the Work of a Trade. N. R. Whitney 660 

5. Union Rules Relative to Tenure and Promotion. G. E. 

Barnett .661 

6. Restriction of Output 

a) Reasons for Restriction. F. T. Carlton .662 


b ) Restriction by Organized Labor. F. T. Carlton and 

United States Bureau of Labor .663 

c ) Some Flagrant Illustrations.665 

d) Labor’s Share in Industrial Waste. Federated American 

Engineering Societies .666 

7. Trade Union Insurance. J. B. Kennedy .667 

8. Trade Agreements 

a) The Stove Industry. F. W. Hilbert and J . P. Frey . . 668 

b) The Clothing Industry. National Industrial Conference 

Board .673 
















XXV111 


CONTENTS 


9. The Ultimate Aims of Trade Unionism—A Radical View, page 


William Z. Foster .676 

Problems on Chapter xxi.677 

References for Further Reading.680 

Chapter XXII. Consumers Co-operation 

1. The Early History of Consumers Co-operation. Paul H. 

Douglas 681 

2. Methods of the Store and the Federation. Mrs. Sidney Webb 682 

3. The Place of the Wholesale. Paul H. Douglas .... 686 

4. Economic Aspects of Consumers Co-operation. C. R. Fay . 687 

5. Consumers Co-operation on the Continent. Charles Gide . 689 

6. The Status of Consumers Co-operation in the United States. 

Florence E. Parker .692 

7. Reasons for Past Failure in the United States. James Ford . 693 

8. The Position of the Employees. Sidney and Beatrice Webb . 694 

9. The Future of Co-operation. New Statesman .697 

Problems on Chapter xxii .702 

References for Further Reading.705 

Chapter XXIII. Labor in Politics 

1. History of British Labor in Politics 


a) Chartism, Trade Unionism and the British Labor Party. 


Conyers Read .706 

b) Present Organization. Labour Year Book .710 

c) Labor and the New Social Order. The British Labour 

Party .711 

2. Early Workingmen’s Parties in the United States 

a) The Workingmen’s Party of New York City, 1829-31. 

F. T. Carlton . 719 


b) Labor Politics and the Business Cycle. E. B. Mittleman . 720 

3. The Political Policy of the A.F. of L. 

a) The Present Procedure of the A.F. of L. Robert Hunter . 722 

b) The Political Aims of the A.F. of L. Paul H. Douglas . 723 

4. Historical Sketch of the Socialist Movement in the United 
States 

a) The Socialist Labor Party and the Socialists. American 

Labor Year Book .725 

b) The Socialist Party and the War. American Labor Year 

Book ..727 

c ) Present Composition and Policies. American Labor Year 

Book .727 

5. The Farmer-Labor Party 

a) The Launching of the Party. William Hard .... 730 

b) Platform of the Party. Nation .731 















CONTENTS 


xxix 


6. The Development of Political Action among the Farmers page 

d) The Non-Partisan League in 1918. William McDonald . 732 

b) Novel Features of the League. H. E. Gaston .... 734 

c) The League in Eclipse (1921). Oliver S. Morris . . . 734 

7. Present Arguments for and against Independent Political 


Action 

a) Why a Labor Party. New Republic .735 

b) The View of the Opposition. Samuel Gompers . . . .737 

Problems on Chapter xxiii.739 

References for Further Reading.740 


PART SIX 

THE EMPLOYER’S APPROACH 

Introduction. 743 

Chapter XXIV. Employers’ Associations and Joint Represen¬ 
tation 

A. Employers’ Associations 

1. The Purpose of Employers’ Associations. Clarence E. Bonnett 744 

2. Types of Employers’ Associations. Clarence E. Bonnett . . 745 

3. The National Founders’ Association. Clarence E. Bonnett . 747 

4. The National Metal Trades Association.747 

5. Constructive Services of Employers’ Associations .... 749 

B. Employee Representation 

6. Essential Nature of Works Councils. National Industrial 

Conference Board .750 

7. American Experience with Works Councils. National 

Industrial Conference Board .752 

8. Employee Representation Plan of Swift and Company. Swift 

and Company . 754 

9. Shop Committees: Substitute for, or Supplement to, Trades 

Unions. Paul H. Douglas .760 

Problems on Chapter xxiv.765 

Chapter XXV. Methods oe Wage Payment and Profit-Sharing 

A. Methods of Wage Payment and Scientific Management 

1. The Different Varieties of Wage Payment. David F. Schloss 768 

2. The Common Basis of Time and Piece Wage. David F. Schloss 769 

3. The Factors Operating for and against Piece Rates. G.D.H. 

Qole . 77 o 

4. The Halsey Premium Plan. H. B. Drury .772 

5. The Taylor Differential Piece Rate. F. W. Taylor . . . 773 

6. The Gantt System. H. L. Gantt . 774 














XXX CONTENTS 

PAGE 

7. The Emerson Efficiency Wage. The Emerson Company . 775 

8. A Comparison of Bonus Plans. M. W. Gassmore . . . . 777 

9. The Main Features of Scientific Management.780 

10. Why Large Groups of Laborers Object to Scientific Manage¬ 
ment. R . F. Hoxie .781 

B. Profit-Sharing and Gain-Sharing 

11. What Is Profit-Sharing ? Report on Profit-Sharing and Labour 

Co-partnership in the United Kingdom .783 

12. An Analysis of Profit-Sharing Schemes. Report on Profit- 

Sharing and Labour Co-Partnership in the United Kingdom . 784 

13. General Principles in American Profit-Sharing. Boris Emmet 785 

14. A Unique Profit-Sharing System.787 

15. The Relative Success of Profit-Sharing. Paul H. Douglas . 789 

16. The Proper Field of Profit-Sharing. A. W. Burritt, H. S. 

Dennison , E. F. Gay , R. E. Heilman, H. P. Kendall . . . 790 


17. Gain-Sharing. H. R. Towne .792 

Problems on Chapter xxv.797 

References for Further Reading.798 


PART SEVEN 

THE COMMUNITY’S APPROACH 
Introduction.801 

Chapter XXVI. Scope and Method of Community Control 


1. The Limits of the Province of Government 

a) The Individualistic Conception. Adam Smith .... 802 

b) The Collectivist Conception. Willard E. Atkins . . . 803 

2. Modes of Community Action 

a) Introductory.806 

b) The Insurance Lobby in Congress. Irene S. Chubb . . 806 

c ) The Role of Public Interest Groups. Survey and Mrs. 

Florence Kelly .808 

3. The Lag in Social Adjustment. W. F. Ogburn .811 

4. The Socialization of Law. Roscoe Pound .813 

Problems on Chapter xxvi.815 

Chapter XXVII. Protective Legislation 

1. Introduction.818 

2. Child-Labor Legislation 

a) Early Factory Legislation Affecting Children. J. B. 

Andrews .819 

b) Child Labor in the United States. United States Chil¬ 
dren’s Bureau .821 















CONTENTS 


xxxi 


c) Federal Child Labor Law of 1916. 247 United States 271 

d) Federal Child-Labor Law of 1919* 259 United States 20 

3. Protection of Women in Industry 

a) Classification of Protective Laws. Ernst Freund 

b) Hour Legislation for Women 

i. Prepared . 

ii. Ernst Freund . 

4. Hour Legislation for Men 

a) Lochner v. New York. 198 U.S. 45 . 

b) Holden v. Hardy. 169 U.S. 366 . 

5. A Case for General Hour Legislation 

a) The Oregon Ten-Hour Case. Defendant's Brief 

b) Basis for General Hour Legislation. Ernst Freund 

6 . Economic Theories of the Minimum Wage 

a) The Minimum Wage and Unemployment. John Bates 

Clark . 

b) The Minimum Wage and Parasitic Industries. Sidney 


PAGE 

822 

823 

825 

826 
828 

829 

835 

838 

84O 


842 


Webb . 

7. The Minimum Wage in Operation 

a) History of the Minimum Wage in America. Dorothy W. 

Douglas . 

b) Effects of the Minimum Wage in Canada. K. Derry and 

Paul H. Douglas . 

c) Operation of the British Trade Boards Act of 1918. British 

Committee of Enquiry . 

8. Recommendations for Revision of the British Trade Boards 

Acts. British Committee of Enquiry . 

9. Legal Status of the Minimum Wage 

a) Argument of Plaintiff. Records of United States Supreme 

Court . 

b) Decision of the Oregon Court. Ibid . 

c ) The District of Columbia Case. 

Problems on Chapter xxvii. 


843 


845 

854 

855 
858 


862 

863 

864 
870 


Chapter XXVIII. The Courts and Organized Labor __ 

1. The Clayton Act and Its Interpretation 

a) The Labor Provisions of the Act. R. E. Montgomery . . 874 

b) Secondary Boycott under the Clayton Act. 254 U.S. 443 876 

2. Recognition of Unionism. 35 Sup. Ct. Rep. 240 .... 877 

3. Legal Liability of Unincorporated Unions. Sup. Ct. 259 U.S. 

344 879 

4. Status of Organizing Activities. 202 Fed. 512 .882 

5. The Strike as a Weapon.885 

Problems on Chapter xxviii.885 


















XXX11 


CONTENTS 


Chapter XXIX. Methods of Securing Industrial Peace 
i . Compulsory Arbitration 

a) Compulsory Arbitration in Australasia. M. B. Hammond 

b) The Australian Federal Arbitration Act. H. B. Higgins . 

c ) The Kansas Court of Industrial Relations. Willard E. 

Atkins . 

2. Compulsory Investigation 

a) Nine Years of the Canadian Act. Ben M. Selekman . 

b) The Railroad Labor Board. Clyde Olin Fisher .... 

3. Arbitration by Mutual Agreement. James H. Tufts . 

4. Proposed National System for Adjusting Industrial Disputes. 

Willard E. Atkins . 

5. A Proposal for the Reorganization of the Railway Industry. 

The Plumb Plan League . 

Problems on Chapter xxix. 

References for Further Reading. 

Index . 


PAGE 

887 

89O 

893 

897 

901 

906 

913 

9l6 

919 

921 

925 








PART ONE 


HUMAN NATURE AND INDUSTRY 




















* 














































. 




INTRODUCTION 


This volume of readings is concerned in general with the study 
of the way in which men in modern times work together to gain a 
living, and more particularly with the part which the wage-earner 
plays in the process, the position which he occupies in the economic 
organization, and the significance of these facts to him, to other 
groups in the community, and to the community as a whole. It is to 
serve, that is, as a basis for studying people in their relation to the 
scheme of production in which they take part. Such a survey may 
properly begin with an effort to see, if only in a preliminary way, what 
kind of creature man is; where he came from; how he has developed; 
what controls his actions; what relationships there are between his 
attitudes, motives and ways of acting, and the environment, social 
and economic, in which he is placed. 

It need not be discouraging to acknowledge at the outset that 
on none of these points will it be possible to get complete or final 
answers. To gain the most partial understanding of modern economic 
organization some assumptions about human nature are necessary. 
A little space may, therefore, be devoted to an examination of current 
assumptions of this kind with the object of comparing them with 
recent psychological and anthropological contributions to knowledge 
about man, and seeing what practical implications such knowledge 
has for purposes of understanding modern economic organization. 

Men have always had, consciously or unconsciously, theories of 
human nature or personality—notions about why they and their 
fellows act as they do in the face of given situations. These notions 
have always necessarily underlain and influenced the policies and 
methods used in directing and controlling schemes of organization 
for producing the goods necessary for subsistence. 

For example, hypotheses about human nature were implicit in 
the behavior of the early members of the race, in their economic and 
social life; hypotheses about human capacity, changeability, and the 
forces that governed action. From what the anthropologists tell us, 
we can, perhaps, conclude that these hypotheses were made up chiefly 
in an empirical way—simply as unconscious reactions from day-to-day 
personal contact. They were, however, deeply tinged with animistic 


3 


4 


THE WORKER IN MODERN ECONOMIC SOCIETY 


beliefs which explained the actions of people as well as of things by 
means of the supernatural control of mythical and unseen beings. 
Both economic technique and the part which people played in economic 
life were therefore largely predetermined by spirits, and could be 
influenced or changed only through the intervention of spirits. As to 
the practical consequences of this type of “theory” it is perhaps 
sufficient to point out here the difficulty of change under such 
conditions. 

A similar relationship between men’s ideas of human character 
and capacity, both potential and actual, and the ways in which eco¬ 
nomic activity is carried on could be traced through any civilization 
about which we have adequate knowledge. In the highly civilized 
Greek city-state, in which a cultured aristocracy was supported by a 
large body of slaves, we have Aristotle’s authority for the notion that 
the people who did the manual work were born slaves, implying 
that men are predetermined “naturally” for the economic position 
they hold. The same caste notion, that people are born with the 
kind of character, capacity, and behavior whfch fits them for their 
own class, is to be found in medieval philosophy, supported there by 
the Divine Will, rather than by “nature.” This kind of thinking 
was, of course, in large part simply an explanation and justification 
of what was, but it represented whatever thinking about human 
nature the times produced, and it had its reflex influence—a conserva¬ 
tive one—on the economic scheme, on the way in which the division 
of labor was carried out and directed. 

One more example from the past will suffice. The rationalism 
of the early nineteenth century broke away from many of the tradi¬ 
tions of classical and medieval philosophy and produced the conception 
of the “economic man.” Briefly, this person was “not the entire 
real man, as we know him in all the complexity of actual life, but an 
abstraction—a being, who, in the pursuit of wealth, moves along the 
lines of least resistance, and does not turn aside towards other ends 
. . . . whose activities are determined solely by the desire for wealth .” 1 
The key to his economic behavior was to be sought solely, therefore, 
in the relative amount of economic gain (pleasures and pains) which 
he could derive from his decisions. This hypothetical person—man 
in the market place—necessarily a highly rational being, acting 
according to intelligent self-interest, took his place at the center of 
the simplified system of perfect competition from which the classical 

John Neville Keynes, The Scope and Method of Political Economy , pp. 113-15. 



INTRODUCTION 


I 


5 


economist began his reasoning . 1 It is now clear that this initial 
assumption has had much indirect influence on our thinking and con¬ 
sequently on our economic policies. It underlay the individualistic 
(laissez faire) policies of the greater part of the nineteenth century. 
It lies hidden still in our ideas about the division of labor, the organiza¬ 
tion of production, remuneration for services, and our exchange sys¬ 
tem as a whole. 

With the spread of the evolutionary view of things in the later 
part of the century, however, and the development of a separate 
science of psychology, this highly rational view of human nature has 
been subjected to severe criticism. However adequate a description 
it may be of man in an organized market (and even here it has distinct 
limitations) it is highly unreal as an explanation of man’s conduct 
in his general business relationships. The psychologists, the anthro¬ 
pologists, and the ethnologists have been studying man critically. 
The psychologist, through observation and laboratory experiment, 
has been trying to work out “laws” which would explain why man acts 
as he does, both alone and in the society of his fellows. The other 
two groups, through historical research and observation of living 
primitive tribes, have been trying to trace his history down through 
the ages. 

Among them, they bid fair to revolutionize our knowledge of 
man’s mental behavior and development as thoroughly as modern 
medical science has revolutionized our knowledge of physiology. A 
beginning only has been made, and investigation has raised more 
questions than it has answered, but at least two hypotheses may be 
set out here as especially significant for our particular purposes. 

The first is that man is not, as was once assumed, a purely rational 
being, and thereby set apart as distinct from the unreasoning and 
“instinctive” animals. He is himself an animal, mentally as well as 
physically, with all the original equipment of other animals, and if 
all the evidence were available a mental line of descent might be 
traced back from modern man to an animal ancestor. The difference 

1 This is not to be interpreted as meaning that the classical economists were 
unaware of the limitations of this picture of human nature. The Wealth of Nations, 
for example, furnishes ample evidence of its great author’s realistic appreciation 
of the complexities of men’s behavior. None the less, the simplification represented 
by the “economic man” became a vital assumption in the systems of thought 
which developed from Smith and Ricardo: an assumption which has perhaps not 
always been sufficiently examined or made allowance for by some of their succes¬ 
sors.—E d. 


6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


in “intelligence” between him and the other animals becomes largely 
a matter of degree, rather than of kind. The second hypothesis 
follows as a corollary from the first: namely, that “human nature” 
is not a fixed and predetermined thing, that it changes and is in 
some sense subject to conscious control. Such control may take the 
form either of controlling heredity or controlling environment. As 
to the truth of these two hypotheses, and in the case of the second, 
in what sense it may be true, the reader is referred to the selections of 
this chapter and to the references for further reading. To these and 
to the questions at the beginning of each main section he is also 
referred for hints as to the implications of the ideas just suggested 
with reference to the main thesis of this book—the worker and his 
part and place in modern economic activity. 

The material of the part has been arranged as follows: 

Chapter i, “Human Nature and Evolution,” is designed to suggest 
why the modern community more than any earlier civilization seems 
to stand in need of better knowledge about man, and to present some 
views on the way in which both men and societies change and develop. 

Chapter ii, “Some Important Aspects of Human Behavior,” 
simply gives in succession a series of side-lights on man’s mental 
make-up, several of them, notably i b, 2b, and 4, discussing the trait 
in question with direct reference to its importance in economic activity. 

Chapter iii, “Theories of Human Nature,” is intended to draw 
together and focus some of the earlier material, and to suggest some 
possible uses of psychology as a tool in approaching the later material 
of the book. 


CHAPTER I 


HUMAN NATURE AND EVOLUTION 

A. Introductory 
i. THE GREAT SOCIETY 1 

During the last hundred years the external conditions of civilised 
life have been transformed by a series of inventions which have 
abolished the old limits to the creation of mechanical force, the carriage 
of men and goods, and communication by written and spoken words. 
One effect of this transformation is a general change of social scale. 
Men find themselves working and thinking and feeling in relation to 
an environment, which, both in its world-wide extension and its 
intimate connection with all sides of human existence, is without 
precedent in the history of the world. 

In those countries where the transformation first began, a majority 
of the inhabitants already live either in huge commercial cities, 
or in closely populated industrial districts threaded by systems of 
mechanical traction and covering hundreds of square miles. Cities 
and districts are only parts of highly organised national states, each 
with fifty or a hundred million inhabitants; and these states are 
themselves every year drawn more effectively into a general system 
of international relationships. 

Fifty years ago the practical men who were bringing their Great 
Society into existence thought, when they had time to think at all, 
that they were thereby offering an enormously better existence to the 
whole human race. Men were rational beings, and, having obtained 
limitless power over nature, would certainly use it for their own good. 

The Great Society, even if it should deprive men of some of the 
romance and intimacy of life, must, they thought, at least give them 
such an increase of security as would be far more than an equal 
return. Famine would be impossible when any labourer could buy 
flour and bacon from the world-market in his village shop. Wars 
would be few and short if they meant disaster to an international 
system of credit. 

1 Adapted with permission from Graham Wallas, The Great Society , pp. 1-15. 
(The Macmillan Co., 1914.) 


7 


8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Now, however, that the change has come, hardly anyone thinks 
of it with the old undoubting enthusiasm. Actual famine has, it is 
true, disappeared from the Great Society, 1 but there remains the 
constant possibility of general and uncontrollable depressions of trade. 
The intervals between great wars are apparently becoming longer, 
but never has the expenditure on armaments been so great or the 
fear of war so constant. 

Wars, however, and commercial crises may be thought of as 
merely accidental interruptions to a social development which steadily 
advances in spite of them. The deeper anxiety of our time arises 
from a doubt, more or less clearly realised, whether that development 
is itself proceeding on right lines. 

And we find ourselves sometimes doubting, not only as to the 
future happiness of individuals in the Great Society, but as to the 
permanence of the Great Society itself. Why should we expect a 
social organisation to endure, which has been formed in a moment 
of time by human beings, whose bodies and minds are the result of 
age-long selection under far different conditions ? 

Social organisation on a large scale is not a wholly new thing. 
For certain restricted purposes—chiefly the levying of taxes and the 
gathering of armies—the empires of Assyria, Persia, and Rome 
organised men on a scale not less than that of a modern state. Yet 
the systems which created these powerful cohesive forces created at 
the same time disruptive forces which proved even more powerful. 
As the ancient empires became larger they became too distant and 
too unreal to stimulate the affection or pride of their subjects. The 
methods of their agents became more mechanical and inhuman, and 
the passions which grouped themselves round smaller units, local or 
racial or religious, produced an ever increasing inner strain. 

Are there any signs of such an inner strain resulting from the 
size and impersonal power of the Great Society ? Has the invention 
of representative government, as its advocates used to argue, prevented 
the forces of class or race or religion or self from ever again thrusting 
against the larger cohesion of the state ? No one who tries to interpret 
the obscure feelings of half-articulate men and women will say so. 
France is a representative republic, and that republic is supported 
by a stronger feeling of political solidarity than is to be found in any 
other European nation. But who can be sure that the forces repre¬ 
sented by the “ sabotage” of the French railway servants or the 

1 This was published in 1914. 


HUMAN NATURE AND EVOLUTION 


9 


turbulence of the vine-growers are declining ? In America the racial 
and class feeling of the new immigrants shows itself unexpectedly 
resistant to the dissolving force of national consciousness. In England 
the “ particularism ” of trades and professions and the racial feeling 
of Wales or Ulster, of Scotland or Catholic Ireland, seem to be growing 
stronger and not weaker. 

The “cash nexus” has, no more than the “voting nexus,” secured 
that common membership of the Great Society shall mean a common 
interest in its solidarity. Everywhere the preachers of syndicalism 
and “direct action,” the editors of clericalist newspapers, the owners 
of “predatory wealth,” claim to represent the real and growing 
social forces as against the phrase-makers, the undenominationalists, 
the bloodless traitors to class or church, who stand for the community 
as a whole. 

The human material of our social machinery will continue to 
disintegrate just at the points where strength is most urgently required. 
Men whom we are compelled to trust will continue to prefer the 
smaller to the larger good. The director will sacrifice the interest 
of his shareholders to his own or that of his family, the statesman 
will sacrifice his country to his party or his constituency or his church, 
the Concert of Europe will remain helpless because each of its constitu¬ 
ent nations refuses to work for the good of the whole. And the results 
of a system which we are not strong enough either to remodel or to 
control will continue to be seen in the slum and the sweating shop, 
the barracks and the base hospital. Our philosophers are toiling to 
refashion for the purposes of social life the systems which used so 
confidently to offer guidance for individual conduct. Our poets and 
playwrights and novelists are revolutionising their art in the attempt 
to bring the essential facts of the Great Society within its range. 

All these efforts run counter to the intellectual habits in which our 
generation was brought up. On its intellectual side the Great Society 
was the work of specialists. During its formation we and our fathers 
learned to admire, without a trace of that scorn which Jesus ben Sirach 
caught from his Greek masters, the leaders of specialised science—the 
chemists who are “wakeful to make clean the furnace,” and the 
biologists “whose discourse is of the stock of bulls.” Each of them 
became “wise in his own work.” We are forced, however, now to 
recognise that a society whose intellectual direction consists only of 
unrelated specialisms must drift, and that we dare not drift any 
longer. We stand, as the Greek thinkers stood, in a new world. 


IO 


THE WORKER IN MODERN ECONOMIC SOCIETY 


And because that world is new, we feel that neither the sectional 
observations of the special student, nor the ever accumulating records 
of the past, nor the narrow experience of the practical man can suffice 
us. We must let our minds play freely over all the conditions of life 
till we can either justify our civilisation or change it. 


2. THE ECONOMIST’S CONCERN WITH HUMAN 

NATURE 1 

[Note. —This selection is given not so much for the theory of 
human nature which it presents as for its suggestions as to our present 
interest in human nature. The psychological theory indicated should 
be read critically and compared with the material of later selections. 
—Ed.] 

One criticism brought against conscious economic theory is that 
it fails to take advised and realistic account of human nature. The 
psychologists have already pretty well revolutionized the scientific 
definition of human nature. Instead of a firm and clear-headed 
control of our actions, we seem to have only the controls emergent 
from the group of complicated psycho-physical mechanisms sometimes 
called the instincts; at once the power plants of action and the 
determiners of its direction. The part of reason in this whole process 
is much less important than the old common-sense view supposed. 
It seems to be merely a selective part. We do not act in response 
to reason; we only, through reasoning, decide upon the repression 
of certain undesirable modes of action and thus clear the way for 
acceptable responses, which, we perceive, will yield us in the long 
run the satisfactions we are driven to seek—those of instinct gratifica¬ 
tion—and the added satisfactions of social approval as well. (Here 
our “higher audience” is a determining factor.) These desirable 
responses are not originally referable to reason and reflection; 
responses are caused by the innate impulses, the instincts. 

Man is equipped with the psychical and physical make-up of 
his first human ancestors; he is the sort of being who functions best 
in the exhilarations and the fatigues of the hunt, of primitive warfare, 
and in the precarious life of nomadism. He rose superbly to the 
crises of these existences. Strangely and suddenly he now finds 
himself transported into a different milieu, keeping, however, as he 

1 Adapted with permission from Rexford G. Tugwell, “Human Nature in 
Economic Theory,” Journal of Political Economy , XXX (June 1922), 317-45. 


HUMAN NATURE AND EVOLUTION 


II 


must, the equipment for the old life, largely useless now. He must 
function as best he can under the new strains and pressures; but the 
happy accordances are few and the disparities many. Fortunately 
his power of reflecting has enabled him to persist under the new 
conditions by modifying his responses to stimuli. Life on the instinc¬ 
tive level is unthinkable in a culture having as its most important 
features urbanization, depersonalization of human contacts, diversity 
of tasks, restrictions on freedom and solitude, monotonies, fatigues, 
and incomplete expressions. And so reason plays its part; but the 
role is not the one assigned under the hedonist conception. Reflection 
is a modifier, an adjuster, not an originator of conduct. So pervasive 
is its influence, however, that our whole modern civilization takes 
on its color; and the higher levels of human achievement appear as 
a triumph of its expression. And man comes to function in his new 
life through habit patterns which may be re-formed by reflection. In 
this way he attains at least a partial mastery of his conduct. 

For the economist who seriously intends to treat production as 
something more dignified than as a source of supply for the market, 
a field of theory entitled to separate endeavor and understanding, 
the questions of human nature will be found to be the most difficult 
and the most immediate. Production is a human enterprise, carried 
on in part at least for the sake of the ultimate human satisfactions to 
be gained by using the goods and services produced. Some production 
is carried on for the sake of the work itself; but in the producing 
efforts of our modern factories (and it is no matter for self- 
congratulation) very few of the resulting goods embody the joy of 
effort. More of them, if they revealed upon their surfaces their human 
costs, would be tinged by the hollow shadows of fatigue and colored 
by the unnatural stains of forced labor. 

The most superficial treatment of the elements of production 
must face again and again such difficulties as the method of payment 
for work, the means of maintaining discipline, and the effects of the 
increasing specialization of process. And there are other questions 
having to do with the determination of the technique of production. 
Not only must the technical arrangements' of factory, warehouse, 
and counting-room be adapted to the nature of the material to be 
shaped and finished; but also the place of work and the way of working 
somehow must be molded more successfully about the producers. 
More expressions and fewer frustrations are the demands of human 
nature that must be met in the working life. 


12 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The motives of men as they go about their economic affairs are 
important for economists to understand whenever there arises a 
question of why it is human conduct follows a given line. It may be 
that all these why questions are irrelevant; but it would be less 
difficult to adhere to this belief if economists had not made such 
wholesale assumptions concerning these very motives. It is assumed 
that workers labor for wages alone, that landlords and capitalists 
permit the use of their instruments of production for rent or for 
interest and for no other reason, and that management in industry 
persists only because of the stimulus of profit. 

But if there is any truth whatever in the behaviorist generalization 
that conduct is infinitely more complex than this would imply, the 
assumption underlying this theory of distributive forces is a mistaken 
one. Men in their economic lives have all the complex motives 
they are actuated by in any of their other spheres of activity. It is 
a false simplification to attempt the reduction of the number of human 
motives to rent, wages, interest, and profits. 

It is certainly true that we cannot know what it is that we want 
for humanity from industry without knowing what the nature of 
humanity is that is to be affected. To attempt to direct the economic 
system toward human welfare without understanding human nature 
would be quite as futile as the attempt to cure disease without a 
preliminary study of physiology, or to do—what no skilled worker 
will defend—work in any material without an intimate understanding 
of its composition, its workability, and its amenability to different 
modes of manipulation. The consequences of programs for the 
redirection of industry are certain to be profoundly serious for human¬ 
ity. The economist’s obligation to understand the substance and 
workability of the endowments and capacities of men is correspond¬ 
ingly heavy. His study of the producer and the consumer cannot 
be confined to their transient appearances in the spot-light of the 
market place. 

3. WHAT A STUDY OF HUMAN BEHAVIOR INVOLVES 1 

Long before the dawn of modern scientific psychology society 
found that by roundabout hit-and-miss methods she had secured a 
fairly serviceable body of data as to what man can do—his complement 
of acts; the appropriate situation for calling out any given act; and 

1 Adapted with permission from J. B. Watson, Psychology from the Standpoint 
of a Behaviorist, pp. 3-13. (J. B. Lippincott Co., Philadelphia and London; 1919.) 


HUMAN NATURE AND EVOLUTION 


13 


crude training methods whereby the repertoire of the acts themselves 
might be enlarged. The business man, the artist, and the artisan 
have built for themselves rather definite rules of psychological pro¬ 
cedure, without ever calling it psychology. Our great military 
leaders, our great religious leaders, the demagogues, and the politicians, 
have accomplished their results by their very wide acquaintanceship 
with the reaction tendencies in man, and by their happy accidents 
in creating the situations which will call out such reactions. 

By reason of the fact that occasional success has been obtained 
by crude methods and happy accidents, we must not conclude that 
psychology should not attempt to discover and analyze and bring under 
scientific control the factors which have occasionally made such 
successes possible. Because an occasional business leader has known 
how to pick out and keep good men, we are offered no reason why we 
should not seek to understand and control the processes involved 
in picking and keeping good men. The same may be said of the 
factors in keeping men out of crime, keeping them honest and sane, 
and their ethical and social life upon a high and well-regulated plane. 

This should convince us of two things: first, that common sense, 
while a reasonable method so far as it goes, does not go far enough 
and never can; and secondly, that in order to make progress, the 
phenomena of human behavior must be made an object of scientific 
study. As a science, psychology puts before herself the task of 
unraveling the complex factors involved in the development of human 
behavior from infancy to old age, and of finding the laws for the regula¬ 
tion of behavior. What we seek to have psychology busy herself with is 
the matter of environmental adjustment; what man can do apart from 
his training; what he can be trained to do, and what the best methods 
for training are; and finally, how, when the varied systems of instincts 
and habits have sufficiently developed, we can arrange the conditions 
for calling out appropriate action upon demand. 

We shall see that there are common factors running through all 
forms of human acts. In each adjustment there is always both a 
response or act and a stimulus or situation which calls out that response. 
Without going too far beyond our facts, it seems possible to say that 
the stimulus is always provided by the environment, external to the 
body, or by the movements of man’s own muscles and the secretions 
of his glands; finally that the responses always follow relatively immedi¬ 
ately upon the presentation or incidence of the stimulus. These are 
really assumptions, but they seem to be basal ones for psychology. 


14 


THE WORKER IN MODERN ECONOMIC SOCIETY 


If we provisionally accept them we may say that the goal of psycho¬ 
logical study is the ascertaining of such data and laws that, given the 
stimulus, psychology can predict what the response will be; or on the 
other hand, given the response, it can specify the nature of the effective 
stimulus. 

Psychology is not concerned with the goodness or badness of 
acts, or with their successfulness, as judged by occupational or moral 
standards. We study man for his reaction possibilities and without 
prejudice: the discovery of the fact that he will make only abortive 
attempts to meet and control certain aspects of his environment is 
an important part of our task; just as important as being able to 
state that he can make certain other types of adjustment. 

“Successful” adjustments, “good” acts, “bad” acts, are really 
terms which society uses. Every social age sets up certain standards 
of action, but these standards change from cultural epoch to cultural 
epoch. Hence they are not psychological standards. Reaction 
possibilities, however, on the average probably remain about the same 
from eon to eon. It lies well within the bounds of probability that 
if we were able to obtain a new-born baby belonging to the dynasty 
of the Pharaohs, and were to bring him up along with other lads 
from Boston, he would develop into the same kind of college youth 
that we find among the other Harvard students. His chances for 
success in life would probably not be at all different from those of 
his classmates. The results obtained from the scientific analysis 
of reaction in the human being should fit any cultural age. The fact 
that social values (group mores ) 1 change puts ever new burdens 
upon the psychologist, because every change in the mores means a 
different situation, to which man has to respond by a different combi¬ 
nation of acts, and any new set of acts must be incorporated into and 
integrated with the rest of the action systems of the individual. 

B. Glimpses of Social Change 
4. THE MEANING OF HUMAN EVOLUTION 2 

There is no doubt that man has existed on the earth for at least 
500,000 years. The relics of his body and the results of his handiwork 
have been found in such number and under such conditions as to 

1 For a fuller definition of the “mores” see pp. 29-30. 

2 Adapted with permission from Vernon Kellogg, “Matilda and the 
Chimpanzee,” New Republic , XXXII, No. 415 (November 15, 1922), 301-2. 


HUMAN NATURE AND EVOLUTION 


15 


indicate his continuous presence on the earth since earliest Pleistocene 
time, more likely, indeed, since late or even middle Pliocene time. 
But also there is no doubt that in these earlier days he was a man of 
appreciably different structure and behavior from man of today. 
Especially did he differ from us of today in head characters and, most 
significantly, in brain size and, evidently, brain character. But 
through those scores and even hundreds of thousands of years, which 
we group as his Paleolithic days, man was moving ever, although 
slowly, very slowly, upward in his evolution—chiefly, probably, 
owing to the influence of those biologic factors to which we attribute 
all of the evolution of the lower animals and the plants. It was a 
slow, painful evolution manifested mostly, and certainly most impor¬ 
tantly, by an evolution of brain, an increase in brain size and a develop¬ 
ment of its associative function. 

But by the time he emerged from the Paleolithic age into the 
brighter light of Neolithic and earliest metal ages, he had reached 
practically the stage of biological evolution in which we find him today. 
The brain of Cro-Magnon man, who lived in Europe at least 30,000, 
and perhaps 50,000, years ago, was quite as large as that of man today, 
and, as far as can be told from the preserved bony brain case, had 
the same shape and general character as the human brain of today. 

A question very often asked of biologists and anthropologists is, 
Has man increased in physical or mental capacity since the days of the 
classic Greeks and Romans or even since the days of the early Egyp¬ 
tians and Mesopotamians and Cretans? And the implication of 
the questions, and of the reproachful and scoffing attitude of the 
questioners, is that he has not. The questioners call attention to 
the artistic and literary achievements, the philosophic systems, the 
men of great mental capacity as revealed by their accomplishments 
in war and statecraft, all admittedly characteristic of human life in 
the earliest historic times, some five or six thousand years ago or longer. 
They call attention to these facts as proof of the equality of human 
physical, mental and spiritual capacity in those days with that of 
today. 

These questioners might well go further and ask the biologist 
and anthropologist if they have any reason to believe that man has 
shown any obvious biological evolution since those prehistoric days 
of the metal ages and Neolithic times, ten, thirty, perhaps fifty 
thousands years ago. The answer is, I think, No. Then in what is 
man of today different from man of those days? The answer is, 


i6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


I think, in that part of his development and possessions due to a new 
and powerful element of progress which entered at some time in late 
Paleolithic days into human evolution, an element which added itself 
to slow biological evolution, an element peculiar to human evolution, 
which we may call social evolution. This kind of evolution could 
not begin until man, through the development of brain, had attained 
by biological evolution a capacity to acquire much knowledge, and, 
by registering it through speech and writing, to pass it on by social 
inheritance to succeeding generations. This storing up and passing 
on of knowledge is the basis of social evolution, and social evolution 
became and is the basis for a rapid progress in human capacity for 
doing. It is the basis on which has depended man’s change from his 
status in late Paleolithic days to his present status. 

Now social evolution can be controlled, and it is in fact so con¬ 
trolled and determined, largely by man himself. His future change 
or progress is in his own hands. Mutual aid is a recognized and power¬ 
ful biological factor in evolution. The biological success of the social 
insects, the a,nts and social bees and wasps, has depended much on 
their adoption of the mutual aid principle. And in man’s biological 
success mutual aid or altruism has played a dominant part. It has 
its little disadvantages in the keeping alive and reproduction of 
hopelessly unfit individuals, but its advantages largely outweigh its 
disadvantages. 

Almost everything that we can conceive of as what we should like 
to see in the progress of human kind can be put into man’s progress 
by a proper control of social evolution. By such a determination of 
social evolution, which is now the major factor in all human evolution, 
man can climb to the highest possible heights of humanism. Thus, 
instead of being robbed by evolution of personal responsibility and 
' of hope of steady social betterment, man is by this very evolution 
given more and more personal responsibility for his own fate and that 
of the race, and has not only hope but assurance given him that by 
wise and beneficent use of his knowledge he can lift himself and his 
race to an ever higher plane. 

5. HOW CIVILIZATION CHANGES 1 

It is characteristic of civilization that it persists; a large part of 
it, most of it, in fact, is passed on from generation to generation. 

1 Adapted with permission from Alexander A. Goldenweiser, Early Civilization, 
pp. 15-19. (Alfred A. Knopf, 1922.) 


HUMAN NATURE AND EVOLUTION 


17 


But also, it changes; at no two points in time is it quite the same, and 
the differences in the civilization of two succeeding generations are 
often perceptible and at times striking. 

It takes but little thought to realize that the changes in civilization 
are each and all due to the emergence of new things, inventions, 
ideas, which, in the last analysis, are always emanations of the minds 
of individuals. Whether the change is in a mechanical device, or a 
detail of social organization; in a new scientific idea or ethical value; 
in a method of simplifying or improving economic production or 
distribution; in a new play, or a novel form of stage art; in an article 
of use, comfort or luxury, a new word, a witticism, a proverb—all 
of these things originate in individual minds and there is no other 
place where they can originate. Nor is this generalization in the least 
affected by whatever view one may hold as to the relative importance 
of the individual and society in the production of civilization. Even 
though the individual were wholly determined by the social setting, all 
of the civilizational changes just referred to, including those in mate¬ 
rial things, would remain psychological in their derivation and, as 
such, they could only originate in individual minds, for there are no 
other minds but those of individuals. Thus the whole of civilization, 
if followed backward step by step, would ultimately be found resolv¬ 
able, without residue, into bits of ideas in the minds of individuals. 

But civilization also persists and accumulates. Some elements 
carry over from generation to generation through the sheer objective 
continuity of material existence. Most of the paraphernalia of our 
complicated mechanical equipment, the roads, vehicles and houses, 
the books in our libraries, the specimens in the museums, persist in 
as crass and material a way as does man’s physical environment. 
The institutions, those crystallized depositories of attitudes, ideas 
and actions, persist in a less objectified form, for they are only in part 
represented by material or mechanical arrangements, such as fixed 
organizations, recorded codes and archives, in whose prolonged exist¬ 
ence the change of generations appears as but an incident. But there 
is still another and more important mechanism through which civiliza¬ 
tion is passed on from fathers to sons. This mechanism, more dynamic 
and plastic than the others, is education. Through education, in 
the home, at school, the past molds the present and sets a pattern 
for the future. 

Here it is important to remember that civilization, psychological 
and individual though it may be when resolved into a chronological 


18 THE WORKER IN MODERN ECONOMIC SOCIETY 

series, is not at all the outgrowth of the minds of individuals of any 
particular generation. On the contrary. It comes to them from 
without, it molds them, it forces itself upon them through the material 
persistence of its objective elements, through its codes and institutions, 
and through the deep cutting tools of education. A large part of the 
educational process strikes the mind of the individual during the years 
of highest receptivity and plasticity. Without accepting the extreme 
verdict of psychoanalysis on this matter, it suffices to realize that 
what is deposited in the mind during the early years of childhood, 
persists throughout later life with often but slight modification. 

Not only is man at the mercy of civilization, but he generally 
remains either partly or wholly unaware of what he is thus forced to 
accept. 

It appears from the above that the individual and the group 
have their share both in the persistence and the originality of civiliza¬ 
tion. The individual is responsible for the creation of the new, 
society provides it with a background and the occasion. For the new 
is never more than a slight ripple on the deep foundation of the old 
and established. The conservative deadweight of society opposes the 
new, but should it appear, molds it to its pattern by prescribing the 
direction it is to take as well as by limiting the range of its departure 
from the old. This is more clearly seen in inventions and artistic 
creations. The talent of an Edison is a congenital gift. Even though 
born in early prehistory, he would have been Edison, but could not have 
invented the incandescent lamp. Instead, he might have originated 
one of the early methods of making fire. Raphael, if brought to life 
in a Bushman family, would have drawn curiously realistic cattle on 
the walls of caves as well as steatopygous Bushman women. Had 
Beethoven been a Chinaman, he would have composed some of those 
delightfully cacophonous melodics which the seeker for the quaint and 
unusual pretends to enjoy in a Chinatown. 

6 . THE INFLUENCE OF TOOLS ON MAN’S 
DEVELOPMENT 1 

Man was the first animal to grow a limb outside of himself by 
making tools out of wood and stone. This was a great achievement. 
Once made and the principle grasped, however dimly, the external 
limb is capable of an infinity of modification, self-suggested by its 

1 Adapted with permission from O. G. S. Crawford, Man and His Past (Oxford 
University Press, 1921). 


HUMAN NATURE AND EVOLUTION 


19 


very inadequacy as a tool. There is no time for automatism to set 
in before the possibility of fresh uses occurs, prompted sometimes 
accidentally by the tool itself. Again, each individual has consciously 
to make the tool for himself, and although this might become almost 
automatic after a time, complete automatism would be avoided by 
the desire to effect small, useful improvements, and the ease and 
rapidity with which these could he produced. 

The external limb, then—the first eolith—comes between man 
and his environment like a highly resistant substance in an electric 
circuit. So long as it is there the current of automatism cannot flow 
freely; from the resultant friction shines out intelligence; and the 
greater the friction the brighter the light. The power of intelligence 
grows' with use, for it is quick to take a hint from its teacher, the 
tool. The tool is improved, fresh demands are made upon intelligence 
to use the new tool aright, and so the process is continued, each in 
turn helping the other. Each step in advance was a small one, 
hardly won perhaps; but each step makes the next more easy. 

The invention of extra-corporeal limbs put a stop to progressive 
structural [body] modifications, for thenceforth such modifications 
took place outside the organism instead of within it as before. 

We can now see why it is that the oldest crania of prehistoric man 
are so remarkably modern in their appearance. The specific human 
type from which we are descended was fixed once and for all at that 
time when the survival-value passed from man’s bodily structure to 
his tools or extra-corporeal limbs. After that a change in the environ¬ 
ment evoked but little response in man’s body; instead, it stimulated 
his brain to invent new “tools” to counteract it. 

This has preserved man’s body in its primitive, plastic, unspecial¬ 
ised form, so that all the avenues of sense remain open. Each of the 
five pathways to the brain remain unobstructed and unblunted by 
special contrivances. That is because our primitive ancestor wisely 
refrained from rushing headlong into blind alleys, like his cousins the 
other protomammals. “Some .... became fleet of foot and 
developed limbs specially adapted to enhance their powers of rapid 
movement.” Thus the ancestor of the horse, for example, sacrificed 
his five toes (which might have become fingers) and grew horny 
hoofs instead, thereby forfeiting for speed his chances of developing 
sensibility of touch. 

Throughout thQ Tertiary Period our far-sighted ancestor “lay low 
and said nuffin,” biding his time like Br’er Rabbit. He did not, like 


20 


THE WORKER IN MODERN ECONOMIC SOCIETY 


so many, spoil his chances by giving way to fear on every possible 
occasion, he did not run away from danger on principle, and so have 
to adapt his limbs for swift flight; nor yet did he yield to the tempta¬ 
tion to clothe himself in protective armour. Nor did he cut himself 
off from the world by adapting nocturnal habits. On the other hand, 
he was not possessed by a devil of pugnacity; he preferred vegetarian¬ 
ism to the horrors of carnivorous diet. Moderate in all things, he 
lived a life of meditative aloofness in the forest, waiting for something 
to turn up. His patience was rewarded; what turned up was not 
any kind of external goods but the key to all such—an intelligent 
mind. 

Now we are in a position to understand why it was that man, and 
man alone, has invented tools. He kept open all the channels of 
sense and developed each of them equally and ’ none too much. 
Further, he acquired the power of associating and comparing the 
memories of impressions arriving through different channels. 

Given a group of such intelligent animals living a semi-arboreal 
life on the margin of a forest-region; given an abundance of stones, 
preferably flints, lying about on the surface; add to these a highly 
intelligent animal, full of curiosity, and with hands free to pick them 
up and use them; and we then have the necessary ingredients of 
primitive tool-using man. 

The brain has thus literally grown at the expense of the body, 
and it has done so largely through the sense of touch—through the 
continual need of controlling the movements of the fingers and hands 
in making and using tools, and through a growth in the intelligent 
perception of the qualities of things which comes from constantly 
handling them. 

The close connection between tools and brain will now become 
clear. Primitive tools were the highest existing functions of brain 
made manifest. Like language they are the incarnation of intelli¬ 
gence. When once we have come to regard all those external con¬ 
trivances which I have summed up in the word “tools” as 
extra-corporeal “limbs,” as consciously devised extensions of our 
personality, then and not till then shall we understand what is the 
underlying factor in human evolution. It amounts to this, that by 
growing different kinds of external limbs men have developed into a 
vast number of different genera and species! The old purely anatomi¬ 
cal bases of race-classification are then seen to be but the splitting of 
hairs. There is far more specific difference between the millionaire 


HUMAN NATURE AND EVOLUTION 


21 


with his huge array of “tools”—a microcosm in himself—and the 
crossing-sweeper with his broom and a few rags. This may seem 
fantastic, but is it really so ? Is it more fantastic to classify men by 
the kind of house in which they live than to classify snails by.their 
shells ? 


PROBLEMS 

1. How do you account for the rapid growth of investigation of “human 
nature” in modern times as compared with earlier periods? 

2. “We all have our theories of human nature, on which we act in our 
daily affairs.” How do we acquire them ? 

3. Read carefully Selection 4, chapter iv, on the economic organization 
of the Incas. How do you account, psychologically, for the static 
character of that organization? Can any conclusions be drawn from 
it as to the inevitability of change in human society ? Granted immu¬ 
nity from outside interference, is a civilization of that type more or 
less likely to survive than one in which change seems part of the order 
of things, like our own ? Which type seems better adapted to the needs 
of “human nature” ? 

4. What difference does it make ( a ) to the community, ( b ) to the business 
manager, (c) to the labor leader, whether man is assumed to be a ra¬ 
tional being or one who is only partly rational, acting chiefly on emo¬ 
tion and impulse ? 

5. What difference does it make to the same three classes whether “human 
nature” is a fixed, predetermined quantity or something that is capable 
of change and modification ? 

6. “Psychological theory about human nature is of no practical account 
anyway. The leaders of men in all ages have been shrewd judges of 
human nature. No academic theory can assist them in practical 
dealings.” What do you think of this position ? 

7. “Life has become too complex and impersonal to be guided only by 
common-sense knowledge of people. We are living in an artificial, 
suddenly developed environment, and we must have conscious adjust¬ 
ment and adaptation between man and this environment if we are to 
survive.” Can you put concrete substance into this statement ? 

8. “Machine industry has run away with us. It is now controlling us 
instead of our controlling it. It rules our thoughts, our actions, our 
lives.” What kind of a theory of human nature does this statement 
imply ? Is it true ? 

9. Suppose you decided that we should be much better off under a com¬ 
munist organization than we are under our present economic system. 
Assume you have unlimited resources at your command for effecting 
the change, and draft a program for bringing it about. Does the 


1 


22 


THE WORKER IN MODERN ECONOMIC SOCIETY 


selection on the Incas throw any light on the feasibility of the project ? 
What national traditions would you regard as your most serious 
obstacles ? 

io. Work out a list of the main forces in modern life which determine a man’s 
mental outlook and attitude, underlining the more important ones. 
Suppose you were (a) a statesman, ( b ) a business manager, ( c ) a labor 
leader. Would the classification be of any use to you ? 

n. What is the difference between a “scientific” and an “unscientific” 
inquiry into human nature? Because earlier thinking about “human 
nature”—Aristotle’s, for example—was not “psychology,” does it follow 
that it has no present value ? 

12. “Primitive man probably ‘thought’ very much as a child thinks. 
He acted in accordance with emotions aroused by immediate experi¬ 
ence.” To what extent and how does education make for a different 
kind of thought ? 

13. “Human nature has not changed, it has simply accumulated.” What 
do you think of the statement and its implications ? 

14. What is meant by “our social heritage”: “our technological heritage” ? 

15. “Systematic thinking is apparently a comparatively late development 
in human experience, and most of the world still lives by imagination 
and passion.” What evidence can you furnish of the truth or falsity 
of this statement ? 

16. “Civilization is a process of ‘canning’ intelligence. The savage 
developed his habits through the repetition of instinctive responses 
made initially to direct stimuli from the world of nature. The modern 
child’s habits are molded by means of a traditional training, much of it 
embodied in printed language, so that his responses to most stimuli 
from the world outside are predetermined by institutional influences. 
Tradition and educaton are thus constantly growing in importance as 
contrasted with instinct and emotion in the formation of habits.” Do 
you think this is true ? Which of the two processes would you regard 
as more conservative ? 

17. According to the theory developed in Selection 6, man became intelligent 
because he did not become specialized: because the tool permitted 
him to keep all his senses open and balanced. Animals, on the other 
hand, became specialized and slaves to particular impulses. If this is 
true, is modern specialism undoing the work thus begun ? 

18. On the basis of this chapter, what conclusions have you come to as to 
the relative importance of “inborn capacity” and “environment” 
in determining ( a ) the character and efficiency of economic organization, 
(b) the character of civilization as a whole? Does the recent history 
of Japan throw any light on this question ? 

19. “Despite the growth of rational thought, myths still play a highly 
important part in men’s minds, in both social and economic life.” 


HUMAN NATURE AND EVOLUTION 


23 


Just what is meant by “myths” in this statement? Can you furnish 
examples of the influence of “myths” in industry? 

20. “The savage, too, had his notion of cause and effect. ‘If you eat the 
heart of a valiant enemy you become strong.’” How did the savage 
get his idea of cause and effect ? How does it differ from the modern 
notion ? 

21. Suppose, during an entire generation, all new-born English babies 
were adopted into French families, and all French babies into English 
families. What would be the resulting change, if any, in the national 
life of the two countries ? 

22. Suppose a corresponding exchange took place between the families in 
a coal-mining town and those in a fashionable suburb. What would be 
the result ? 

23. Have these questions any relation to problems of industrial organization, 
or to the worker’s place and part in economic society ? 


CHAPTER II 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 
i. SOURCES OF HUMAN ENERGY 

a) THE ENERGIES OE MEN 1 

Everyone knows what it is to start a piece of work, either intel¬ 
lectual or muscular, feeling stale—or oold , as an Adirondack guide 
once put it to me. And everybody knows what it is to “warm up” 
to his job. The process of warming up gets particularly striking in 
the phenomenon known as “second wind.” On usual occasions we 
make a practice of stopping an occupation as soon as we meet the first 
effective layer (so to call it) of fatigue. But if an unusual necessity 
forces us to press onward, a surprising thing occurs. The fatigue gets 
worse up to a certain critical point, when gradually or suddenly it 
passes away, and we are fresher than before. We have evidently 
tapped a level of new energy, masked until then by the fatigue- 
obstacle usually obeyed. There may be layer after layer of this 
experience. A third and a fourth “wind” may supervene. Mental 
activity shows the phenomenon as well as physical, and in exceptional 
cases we may find, beyond the very extremity of fatigue-distress, 
amounts of ease and power that we never dreamed ourselves to own— 
sources of strength habitually not taxed at all, because habitually, 
we never push through the obstruction, never pass those early critical 
points. 

It is evident that our organism has stored-up reserves of energy 
that are ordinarily not called upon, but that may be called upon: 
deeper and deeper strata of combustible or explosible material, dis- 
continuously arranged, but ready for use by anyone who probes so 
deep, and repairing themselves by rest as well as do the superficial 
strata. Most of us continue living unnecessarily near our surface. 

If my reader will put together two conceptions, first, that few men 
live at their maximum of energy, and second, that anyone may be in 
vital equilibrium at very different rates of energizing, he will find, 
I think, that a very pretty practical problem of national economy, 

1 Adapted with permission from William James, “The Energies of Men,” 
in Memories and Studies , pp. 229-63. (Longmans, Green, & Co., 1911.) 


24 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


25 


as well as of individual ethics, opens upon his view. In rough terms, 
we may say that a man who energizes below his normal maximum 
fails by just so much to profit by his chance at life; and that a nation 
filled with such men is inferior to a nation run at higher pressure. 
The problem is, then, how can men be trained up to their most useful 
pitch of energy ? And how can nations make such training most 
accessible to all their sons and daughters? This, after all, is only 
the general problem of education, formulated in slightly different 
terms 

“Rough” terms, I said just now, because the words “energy” 
and “maximum” may easily suggest only quantity to the reader’s 
mind, whereas in measuring the human energies of which I speak, 
qualities as well as quantities have to be taken into account. Every¬ 
one feels that his total power rises when he passes to a higher qualitative 
level of life. 

Let no one think, then, that our problem of individual and national 
economy is solely that of the maximum of pounds raisable against 
gravity, the maximum of locomotion, or of agitation of any sort, 
that human beings can accomplish. That might signify little more 
than hurrying and jumping about in inco-ordinated ways; whereas 
inner work, though it so often reinforces outer work, quite as often 
means its arrest. To relax, to say to ourselves (with the “new 
thoughters”) “Peace! be still!” is sometimes a great achievement of 
inner work. When I speak of human energizing in general, the reader 
must therefore understand that sum-total of activities, some outer 
and some inner, some muscular, some emotional, some moral, some 
spiritual, of whose waxing and waning in himself he is at all times so 
well aware. How to keep it at an appreciable maximum ? How not 
to let the level lapse ? That is the great problem. 

The first point to agree upon in this enterprise is that as a rule 
men habitually use only a small part of the powers which they actually 
possess and which they might use under appropriate conditions. 

Admit so much, then, and admit also that the charge of being 
inferior to their full self is far truer of some men than of others; then 
the practical question ensues: to what do the better men owe their escape ? 
and , in the fluctuations which all men feel in their own degree of energizing , 
to what are the improvements due , when they occur ? 

In general terms the answer is plain: 

Either some unusual stimulus fills them with emotional excitement, 
or some unusual idea of necessity induces them to make an extra 


26 


THE WORKER IN MODERN ECONOMIC SOCIETY 


effort of will. Excitements, ideas, and efforts, in a word, are what 
carry us over the dam. 

But when the normal tasks and stimulations of life don’t put a 
man’s deeper levels of energy on tap, and he requires distinctly 
deleterious excitements, his constitution verges on the abnormal. 
The normal opener of deeper and deeper levels of energy is the will. 
The difficulty is to use it, to make the effort which the word volition 
implies. But if we do make it (or if a god, though he were only the 
god Chance, makes it through us), it will act dynamogenically on us 
for a month. It is notorious that a single successful effort of moral 
volition, such as saying “no” to some habitual temptation, or perform¬ 
ing some courageous act, will launch a man on a higher level of energy 
for days and weeks, will give him a new range of power. 

Certain men can be influenced, while others cannot be influenced, 
by certain sorts of ideas. There are common lines along which men 
simply as men tend to be inflammable by ideas. As certain objects 
naturally awaken love, anger, or cupidity, so certain ideas naturally 
awaken the energies of loyalty, courage, endurance, or devotion. 
When these ideas are effective in an individual’s life, their effect is 
often very great indeed. They may transfigure it, unlocking innumer¬ 
able powers which, but for the idea, would never have come into 
play. “Fatherland,” “the Flag,” “the Union,” “Holy Church,” 
“the Monroe Doctrine,” “Truth,” “Science,” “Liberty,” Garibaldi’s 
phrase, “Rome or Death,” etc., are so many examples of energy¬ 
releasing ideas. The social nature of such phrases is an essential 
factor of their dynamic power. They are forces of detent in situations 
in which no other force produces equivalent effects, and each is a 
force of detent only in a specific group of men. 

b ) MENTAL ASPECTS OE FATIGUE 1 

A study of output figures is an excellent introduction to an under¬ 
standing of the real nature of industrial fatigue, for they reveal it 
as being not wholly a diminished efficiency of the muscles or the 
nervous system but a diminished efficiency of the human will in addi¬ 
tion. Some writers who have formed no working conception of a 
fatigue of the will deem that it is necessary to assert that feeling tired 
and being tired need not be the same thing; there is no close relation, 
they will say, between the feeling of fatigue and the fact of fatigue. 

1 Adapted with permission from Frank Watts, An Introduction to the Psycho¬ 
logical Problems of Industry, pp. 40-43. (George Allen & Unwin Ltd., 1921.) 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


27 


Now, it is quite true that there is no marked correlation between 
the feeling of tiredness as experienced under the ordinary working 
conditions of everyday life and the physiological capacity of the 
organism for further work. As Dr. C. S. Myers writes: “To feel 
fatigue is by no means inconsistent with the performance of 
increased muscular work; the former is never a safe criterion of the 
latter.” Here we may conceive activity as perhaps continuing 
because of its own momentum. Usually, however, we feel too tired, 
not to cease effort, but to initiate it. In such a condition we may 
well imagine that the human engine still retains possibly a large part 
of its latent energy and efficiency, but that the will to set it going is 
defective. 

It would seem imperative that we should form a conception of 
the existence of fatigue in the higher levels of human life, in the will, 
the interests, and in the creative aspirations, as well as in the muscles 
and the nervous system, if we are to form a complete picture of our 
problem. 

It may, of course, be theoretically sound to maintain that every 
form of fatigue has a physical basis, but for practical purposes it will 
be wise and helpful to recognize a working distinction between mental 
fatigue and physical fatigue, between the inability to set the human 
machine in motion and the inability to keep it running, the more so 
because defects of the “ will-to-energize ” cannot yet be profitably 
attacked through the body. The prevalence of neurasthenia among 
modern workers, for example, may not be due so much to a hypo¬ 
thetical wear and tear of the nervous system through the demands of 
industrial life as to the strain caused by individual difficulties of secur¬ 
ing a satisfactory mental attitude towards the work performed; the 
right perspectives are wanting; the machine can never be set fairly 
running except at a too great expenditure of mental energy. 

The establishment of mental attitudes favourable to continued 
effort along lines of activity which are not immediately connected 
with crude self-interest is an exceedingly arduous task, but a highly 
important duty, since we shall be confronted in the future with morale 
problems of growing complexity in all the avenues of social progress. 
The beliefs and aspirations of the workers play a great part in warding 
off (or bringing on) fatigue. A wide-spread acceptance of the belief, 
for example, that the wage-earners could never really improve their 
status would be enough to break beyond repair many of the ordinary 
springs of conduct, deaden all human initiative, and restrict their 


28 


THE WORKER IN MODERN ECONOMIC SOCIETY 


efforts to the attempt to satisfy bodily needs. In industry we have, 
then, at once, to work out the rudiments of the science of human 
economy and organization, and see that unnecessary fatigue is 
abolished. We shall not solve our problems by exclusive attention to 
the mechanical forms of fatigue. But though we may not know 
precisely what the more subtle forms of human fatigue are, we may, 
like the electrician who is ignorant of the real nature of electricity, 
learn how to deal in action with the phenomena which we still, in 
theory, fail to understand. 

2. THE NATURE AND IMPORTANCE OF HABIT 

a) THE FUNCTIONS OF HABIT 1 

When we look at living creatures from an outward point of view, 
one of the first things that strikes us is that they are bundles of habits. 
In wild animals, the usual round of daily behaviour seems a necessity 
implanted at birth; in animals domesticated, and especially in man, 
it seems, to a great extent, to be the result of education. The habits 
to which there is an innate tendency are called instincts; some of 
those due to education would by most persons be called acts of reason. 

We may trace some of the practical applications of the principle 
to human life. 

The first result of it is that habit simplifies the movements required 
to achieve a given result, makes them more accurate and diminishes 
fatigue. 

Man is born with a tendency to do more things than he has 
ready-made arrangements for in his nerve-centres. Most of the 
performances of other animals are automatic. But in him the 
number of them is so enormous, that most of them must be the fruit 
of painful study. If practice did not make perfect, nor habit econ¬ 
omize the expense of nervous and muscular energy, he would there¬ 
fore be in a sorry plight. 

The next result is that habit diminishes the conscious attention 
with which our acts are performed. When we are learning to walk, 
to ride, to swim, skate, fence, write, play, or sing, we interrupt our¬ 
selves at every step by unnecessary movements and false notes. 
When we are proficients, on the contrary, the results not only follow 
with the very minimum of muscular action requisite to bring them 
forth, they also follow from a single instantaneous “cue.” The 

1 Adapted with permission from William James, Principles of Psychology , 
pp. 104-21. (Henry Holt & Co., 1890.) 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


29 


marksman sees the bird, and, before he knows it, he has aimed and 
shot. A gleam in his adversary’s eye, a momentary pressure from 
his rapier, and the fencer finds that he has instantly made the right 
parry and return. 

Habit is thus the enormous fly-wheel of society, its most precious 
conservative agent. It alone is what keeps us all within the bounds 
of ordinance, and saves the children of fortune from the envious 
uprisings of the poor. It alone prevents the hardest and most repul¬ 
sive walks of life from being deserted by those brought up to tread 
therein. It keeps the fisherman and the deck-hand at sea through 
the winter; it holds the miner in his darkness, and nails the country¬ 
man to his log-cabin and his lonely farm through all the months of 
snow; it protects us from invasion by the natives of the desert and 
the frozen zone. It dooms us all to fight out the battle of life upon the 
lines of our nurture or our early choice, and to make the best of a 
pursuit that disagrees, because there is no other for which we are fitted, 
and it is too late to begin again. It keeps different social strata from 
mixing. Already at the age of twenty-five you see the professional 
mannerism settling down on the young commercial traveller, on the 
young doctor, on the young minister, on the young counsellor-at-law. 
You see the little lines of cleavage running through the character, 
the tricks of thought, the prejudices, the ways of the “shop,” in a 
word, from which the man can by-and-by no more escape than his 
coat sleeve can suddenly fall into a new set of folds. On the whole, 
it is best he should not escape. It is well for the world that in most 
of us, by the age of thirty, the character has set like plaster, and 
will never soften again. 

b) HABIT IN SOCIAL LITE: THE FOLKWAYS AND MORES 1 

All the life of human beings, in all ages and stages of culture, is 
primarily controlled by a vast mass of folkways handed down from 
the earliest existence of the race, having the nature of the ways of 
other animals, only the topmost layers of which are subject to change 
and control, and have been somewhat modified by human philosophy, 
ethics, and religion, or by other acts of intelligent reflection. We 
are told of savages that “ It is difficult to exhaust the customs and small 
ceremonial usages of a savage people. Custom regulates the whole 
of a man’s actions—his bathing, washing, cutting his hair, eating, 
drinking, and fasting. From his cradle to his grave he is the slave 

1 Adapted with permission from William Graham Sumner, Folkways , pp. 
3-4, 28, 79. (Ginn & Co., Boston, 1907.) 


30 


THE WORKER IN MODERN ECONOMIC SOCIETY 


of ancient usage. In his life there is nothing free, nothing original, 
nothing spontaneous, no progress towards a higher and better life, 
and no attempt to improve his condition, mentally, morally, or 
spiritually.” All men act in this way with only a little wider margin 
of voluntary variation. 

The folkways are the “right” ways to satisfy all interests, because 
they are traditional, and exist in fact. They extend over the whole of 
life. There is a right way to catch game, to win a wife, to make 
one’s self appear, to cure disease, to honor ghosts, to treat comrades 
or strangers, to behave when a child is born, on the warpath, in council, 
and so on in all cases which can arise. The ways are defined on the 
negative side, that is, by taboos. The “right” way is the way which 
the ancestors used and which has been handed down. 

We find that changes in history are primarily due to changes in 
life conditions. Then the folkways change. Then new philosophies 
and ethical rules are invented to try to justify the new ways. The 
whole vast body of modern mores has thus been developed out of the 
philosophy and ethics of the Middle Ages. So the mores which have 
been developed to suit the system of great secular states, world 
commerce, credit institutions, contract wages and rent, emigration 
to outlying continents, etc., have become the norm for the whole body 
of usages, manners, ideas, faiths, customs, and institutions which 
embrace the whole life of a society and characterize an historical epoch. 

We may formulate a more complete definition of the mores. 
They are the ways of doing things which are current in a society to 
satisfy human needs and desires, together with the faiths, notions, 
codes, and standards of well living which inhere in those ways, having 
a genetic connection with them. 

We see that we must conceive of the mores as a vast system of 
usages, covering the whole of life, and serving all its interests; also 
containing in themselves their own justification by tradition and use 
and wont, and approved by mystic sanctions until, by rational 
reflection, they develop their own philosophical and ethical generaliza¬ 
tions, which are elevated into “principles” of truth and right. They 
coerce and restrict the newborn generation. They do not stimulate 
to thought, but the contrary. The thinking is already done and is 
embodied in the mores. They never contain any provision for their 
own amendment. They are not questions, but answers, to the problem 
of life. They present themselves as final and unchangeable, because 
they present answers which are offered as “the truth.” 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


31 


3. THREE TYPES OF “EMULATION” 1 

It will be convenient to distinguish three sorts of emulation— 
conformity, rivalry, and hero-worship. 

Conformity may be defined as the endeavor to maintain a standard 
set by a group. It is. a voluntary imitation of prevalent modes of 
action, distinguished from rivalry and other aggressive phases of 
emulation by being comparatively passive, aiming to keep up rather 
than to excel, and concerning itself for the most part with what is 
outward and formal. On the other hand, it is distinguished from 
involuntary imitation by being intentional instead of mechanical. 
Thus it is not conformity, for most of us, to speak the English language, 
because we have practically no choice in the matter, but we might 
choose to conform to particular pronunciations or turns of speech 
used by those with whom we wish to associate. 

Every profession, trade or handicraft, every church, circle, 
fraternity or clique, has its more or less definite standards, conformity 
to which it tends to impose on all its members. It is not at all essential 
that there should be any deliberate purpose to set up these standards, 
or any special machinery for enforcing them. They spring up spon¬ 
taneously, as it were, by an unconscious process of assimilation, and 
are enforced by the mere inertia of the minds constituting the group. 

There are two aspects of non-conformity; first, a rebellious impulse 
or “contrary suggestion” leading to an avoidance of accepted 
standards in a spirit of opposition, without necessary reference to any 
other standards; and, second, an appeal from present and common¬ 
place standards to those that are comparatively remote and unusual. 
These two usually work together. One is led to a mode of life different 
from that of the people about him, partly by intrinsic contrariness, 
and partly by fixing his imagination on the ideas and practices of 
other people whose mode of life he finds more congenial. 

The essence of non-conformity as a personal attitude consists in 
contrary suggestion or the spirit of opposition. Controlled by 
intellect and purpose this passion for differentiation becomes self- 
reliance, self-discipline, and immutable persistence in a private aim: 
qualities which more than any others make the greater power of 
superior persons and races. It is largely this that makes the world¬ 
winning pioneer, who keeps pushing on because he wants a place 
all to himself, and hates to be bothered by other people over whom 

1 Adapted with permission from C. H. Cooley, Human Nature and the Social 
Order, pp. 262-81. (Charles Scribner’s Sons, 1902.) 


32 


THE WORKER IN MODERN ECONOMIC SOCIETY 


he has no control. On the frontier a common man defines himself 
better as a cause. He looks round at his clearing, his cabin, his 
growing crops, his wife, his children, his dogs, horses, and cattle, 
and says, “I did it: they are mine.” All that he sees recalls the 
gjorious sense of things won by his own hand. 

A just view of the matter should embrace the whole of it at once, 
and see conformity and non-conformity as normal and complementary 
phases of human activity. In their quieter moods men have a 
pleasure in social agreement and the easy flow of sympathy, which 
makes non-conformity uncomfortable. But when their energy is 
full and demanding an outlet through the instincts, it can only be 
appeased by something which gives the feeling of self-assertion. 

I mean by rivalry a competitive striving urged on by the desire 
to win. It resembles conformity in that the impelling idea is usually 
a sense of what other people are doing and thinking, and especially 
of what they are thinking of us: it differs from it chiefly in being 
more aggressive. Conformity aims to keep up with the procession, 
rivalry to get ahead of it. The former is moved by a sense of the 
pains and inconveniences of differing from other people, the latter 
by an eagerness to compel their admiration. 

On the other hand, rivalry may be distinguished from finer sorts 
of emulation by being more simple, crude, and direct. It implies 
no very subtle mental activity, no elaborate or refined ideal. The 
motive of rivalry, then, is a strong sense that there is a race going on, 
and an impulsive eagerness to be in it. It is rather imitative than 
inventive; the idea being not so much to achieve an object for its 
own sake, because it is reflectively judged to be worthy, as to get 
what the rest are after. There is conformity in ideals combined with 
a thirst for personal distinction. Charles Booth, who has studied 
so minutely the slums of London, says that “among the poor, men 
drink on and on from a perverted pride,” and among another class a 
similar sentiment leads women to inflict surprising deformities of the 
trunk upon themselves. Professor William James suggests that 
rivalry does nine tenths of the world’s work. 

By hero-worship is here meant an emulation that strives to imitate 
some admired character, in a spirit not of rivalry or opposition, but 
of loyal enthusiasm. It is higher than rivalry, in the sense that it 
involves a superior grade of mental activity, though, of course, there 
is no sharp line of separation between them. While the other is a 
rather gross and simple impulse, common to all men and to the higher 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


33 


animals, the hero-worshipper is an idealist, imaginative; the object 
that arouses his enthusiasm and his endeavor does so because it bears 
a certain relation to his aspirations, to his constructive thought. 
Hero-worship is thus more selective, more significant of the special 
character and tendencies of the individual, in every way more highly 
organized than rivalry. 

As hero-worship becomes more imaginative, it merges insensibly 
into that devotion to ideal persons that is called religious. Hero- 
worship is a kind of religion, and religion, in so far as it conceives 
persons, is a kind of hero-worship. That the personality toward 
which the feeling is directed is ideal evidently affords no fundamental 
distinction. The ideal persons of religion are not fundamentally 
different, psychologically or sociologically, from other persons; 
they are personal ideas built up in the mind out of the material at its 
disposal, and serving to appease its need for a sort of intercourse 
that will give scope to reverence, submission, trust, and self-expanding 
enthusiasm. 

4. THE “HERD” TENDENCIES IN INDUSTRY 1 

A study of the evolution of purposive behaviour reveals to us 
several marked stages, though with infinite gradations between 
them. In the presence of effective stimuli the lowest forms of life 
are characterized by two fundamental activities of an almost mechani¬ 
cal kind, the “tropisms” of attraction and repulsion. But gradually 
the part played by active life during the slow march of evolution 
becomes more and more pronounced, and after a while intelligent 
spontaneity of response is to be seen in and behind the mechanical 
reactions. Life masters the performance, that is to say, of a variety 
of responses and methods in its appetitions, and to a lesser extent in 
its aversions. 

As soon as the developing organism becomes aware that it is not 
alone in its search for food, and that other organisms are seeking the 
same ends as itself and endeavouring to avoid the same dangers, the 
gregarious or “herd” tendencies begin to take form and develop; 
that is, we may observe the instinctive reactions becoming to some 
extent modified, so that they take on an other -regarding in addition 
to a self- regarding character; under the influence of herd-consciousness, 
therefore, several further differentiations of the root-impulses of human 

1 Adapted with permission from Frank Watts, An Introduction to the Psycho¬ 
logical Problems of Industry , pp. 160-68. (George Allen & Unwin, Ltd., 1921.) 


34 


THE WORKER IN MODERN ECONOMIC SOCIETY 


nature become possible, and accordingly take place. Thus gregarious¬ 
ness, by rendering adaptation to environment necessarily more 
complex, determines to a large extent the mental growth of all the 
higher animals which come under its influence. Living happily 
among others, that is to say, demands greater intelligence than living 
alone; yet animals and children, and men and women, grow to like 
living together, and normally resent being isolated, in spite of the 
antagonisms which may arise through social intercourse. 

More and more we are finding it difficult to get people to accept 
and hold for any length of time occupations which automatically 
cut them off from social life. Today practically all our servants are 
being recruited from the countryside, where individuals have become 
more or less accustomed to comparatively uneventful existence. 
Yet most of these girls grow restive after a time, in their half-way 
advance towards complete immersion in the stream of social life, and 
are drawn off ultimately into what is for them the more stimulating 
current of factory life. 

There is no fundamental reason why an industrial civilization 
should be based mainly on city life. It happened, unfortunately, 
in this country that the Industrial Revolution was in full movement 
before transport facilities had developed to any extent. To be 
nearer their work men went into towns to live who might have been 
content to dwell in their native rural surroundings had there been 
railways to take them backward and forward. It may be that in the 
future there will be an attempt made to de-urbanize communities in 
such a way that men and women can live and work together without 
losing touch with nature. 

All the tactics of management should be planned to strengthen 
the “common purpose” which unites men and women engaged together 
at the same work: it is fatal to centre by repressive measures the 
bond of the workers’ unity in a sense of injury. Indeed, whenever 
an ordinary manifestation of normal human instinct is met by manage¬ 
ment with flat opposition, then it either takes on a fighting form 
with the potential support of all the emotional energy of the person¬ 
ality, or it sinks back defeated, leaving the workers disturbed and 
irritated, and in ripe condition, to change the metaphor, for falling 
under the influence of others who are discontented. 

To those employers who find mass-action a repulsive method of 
expressing crude animal passion one ought to say that there is no 
reason whatever why the bond of unity among the workers should 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


35 


consist of a common grievance. Perhaps there is room and occasion 
for a differentiation of the meanings of the words crowd , mob, group 
and community to express the idea that what unites people varies 
according to the occasion. A crowd, as most observers would agree, 
is a loosely-knit-together heterogeneous collection of individuals 
with a variety of interests, but a single commonly-experienced emotion 
will convert them instantaneously into a mob. A group, however, 
is the crowd united not by crude feeling, but through devotion to a 
common interest or principle, so that emotion in the group is healthy 
and the end pursued calmly and deliberately chosen. In the com¬ 
munity, amid a variety of conflicting interests, there is still a real bond 
of unity, and that bond is the common culture and civilization. 
Thus the community is more complex in its unity than the group. 
Those who have entered intimately into the common experiences of 
the group and of the community usually find the satisfactions of mob- 
life ephemeral. For the manager, then, who dislikes the mob, the 
way to counteract its evil influences is to organize groups of various 
kinds within his works, or better, to encourage his workers to join 
suitable clubs, circles or societies outside. 

It is the herd-feeling which is the cementing agency responsible 
for labour solidarity, and it is because the tendency to impulsive and 
unthinking group action is strongest among those who feel that they 
most need protection that Taylor and his less discriminating followers 
of the early scientific management movement were wrong in ignoring 
it or trying to break it down when it took the form of unionism. 
In this country 1 w r e have rightly accepted even organized and deliberate 
group action in the form of Trade Unionism as a natural and healthy 
thing, and we have rightly decided that it must be utilized and 
developed rather than opposed. 

Throughout history man has always found his chief means of 
self-expression in work that is of social value, and has never lived 
happily apart from some definite group to which he could voluntarily 
yield homage, and from which he might derive emotional satisfaction 
and inspiration. In the past it has been mainly through kinship 
groups, through church or political party, through territorial or 
occupational association that he has drunk deep of the fuller and more 
enduring pleasures which are to be found in group life. To-day the 
trade union, even if it does not provide the satisfactions, is at least 
the group in which the largest number of men and women participate. 

1 England. 


36 


THE WORKER IN MODERN ECONOMIC SOCIETY 


As McDougall says, “almost the only condition of wide and general 
influence that continues in times of peace to foster group self-conscious¬ 
ness is occupational association.” Group life at its best stabilizes 
and civilizes the individual. 

5. THE NATURE AND FUNCTION OF 
RATIONAL THOUGHT 

a) THE NATURE OF JUDGMENT 1 

A man of good judgment in a given set of affairs is a man in so 
far educated, trained, whatever may be his literacy. That there is 
an intimate connection between judgment and inference is obvious 
enough. The aim of inference is to determine itself in an adequate 
judgment of a situation, and the course of inference goes on through 
a series of partial and tentative judgments. What are these units, 
these terms of inference when we examine them on their own account ? 
Their significant traits may be readily gathered from a consideration 
of the operations to which the word judgment was originally applied: 
namely, the authoritative decision of matters in legal controversy— 
the procedure of the judge on the bench. There are three such features: 
(1) a controversy, consisting of opposite claims regarding the same 
objective situation; (2) a process of defining and elaborating these 
claims and of sifting the facts adduced to support them; (3) a final 
decision, or sentence, closing the particular matter in dispute and also 
serving as a rule or principle for deciding future cases. 

1. Unless there is something doubtful, the situation is read off 
at a glance; it is taken in on sight, i.e., there is merely apprehension, 
perception, recognition, not judgment. If the matter is wholly doubt¬ 
ful, if it is dark and obscure throughout, there is a blind mystery and 
again no judgment occurs. But if it suggests, however vaguely, differ¬ 
ent meanings, rival possible interpretations, there is some point at 
issue , some matter at stake. Doubt takes the form of dispute, contro¬ 
versy; different sides compete for a conclusion in their favor. 

2. The hearing of the controversy, the trial, i.e. the weighing of 
alternative claims, divides into two branches, either of which, in a 
given case, may be more conspicuous than the other. In the con¬ 
sideration of a legal dispute, these two branches are sifting the evi¬ 
dence and selecting the rules that are applicable; they are “ the facts” 
and “the law” of the case. In judgment they are (a) the determina- 

1 Adapted with permission from John Dewey, How We Think , pp. 101-11. 
(D. C. Heath & Co., 1910.) 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


37 


tion of the data that are important in the given case (compare the 
inductive movement); and ( b ) the elaboration of the conceptions or 
meanings suggested by the crude data (compare the deductive move¬ 
ment). (a) What portions or aspects of the situation are significant 
in controlling the formation of the interpretation? (b) Just what is 
the full meaning and bearing of the conception that is used as a method 
of interpretation? These questions are strictly correlative; the 
answer to each depends upon the answer to the other. We may, 
however, for convenience, consider them separately. 

(a) In every actual occurrence, there are many details which are 
part of the total occurrence, but which nevertheless are not significant 
in relation to the point at issue. All parts of an experience are equally 
present, but they are very far from being of equal value as signs or as 
evidences. Nor is there any tag or label on any trait saying: “This is 
important,” or “This is trivial.” Nor is intensity, or vividness or 
conspicuousness, a safe measure of indicative and proving value. The 
glaring thing may be totally insignificant in this particular situation, 
and the key to the understanding of the whole matter may be modest or 
hidden. Features that are not significant are distracting; they proffer 
their claims to be regarded as clues and cues to interpretation, while 
traits that are significant do not appear on the surface at all. Hence, 
judgment is required even in reference to the situation or event that 
is present to the senses; elimination or rejection, selection, discovery, 
or bringing to light must take place. Till we have reached a final 
conclusion, rejection and selection must be tentative or conditional. 
We select the things that we hope or trust are cues to meaning. But 
if they do not suggest a situation that accepts and includes them, we 
reconstitute our data, the facts of the case, for we mean, intellectually, 
by the facts of the case those traits that are used as evidence in reaching 
a conclusion or forming a decision. 

Long brooding over conditions, intimate contact associated with 
keen interest, thorough absorption in a multiplicity of allied expe¬ 
riences, tend to bring about those judgments which we then call intui¬ 
tive; but they are true judgments because they are based on 
intelligent selection and estimation, with the solution of a problem 
as the controlling standard. Possession of this capacity makes the 
difference between the artist and the intellectual bungler. 

Such is judging ability, in its completest form, as to the data of 
the decision to be reached. But in any case there is a certain feeling 
along for the way to be followed; a constant tentative picking out of 


38 


THE WORKER IN MODERN ECONOMIC SOCIETY 


certain qualities to see what emphasis.upon them would lead to; a 
willingness to hold final selection in suspense; and to reject the factors 
entirely or relegate them to a different position in the evidential 
scheme if other features yield more solvent suggestions. Alertness, 
flexibility, curiosity are the essentials; dogmatism, rigidity, prejudice, 
caprice, arising from routine, passion, and flippancy are fatal. 

(b) This selection of data is, of course, for the sake of controlling 
the development and elaboration of the suggested meaning in the light 
of which they are to be interpreted. An evolution of conceptions 
thus goes on simultaneously with the determination of the facts; 
one possible meaning after another is held before the mind, considered 
in relation to the data to which it is applied, is developed into its more 
detailed bearings upon the data, is dropped or tentatively accepted 
and used. We do not approach any problem with a wholly naive 
or virgin mind; we approach it with certain acquired habitual modes 
of understanding, with a certain store of previously evolved meanings, 
or at least of experiences from which meanings may be educed. If 
the circumstances are such that a habitual response is called directly 
into play, there is an immediate grasp of meaning. If the habit is 
checked, and inhibited from easy application, a possible meaning for 
the facts in question presents itself. No hard and fast rules decide 
whether a meaning suggested is the right and proper meaning to 
follow up. The thinker has to decide, to choose; and there is always 
a risk, so that the thinker selects warily, subject, that is, to confirma¬ 
tion or frustration by later events. If one is not able to estimate 
wisely what is relevant to the interpretation of a given perplexing or 
doubtful issue, it avails little that arduous learning has built up a large 
stock of concepts. For learning is not wisdom; information does 
not guarantee good judgment. Memory may provide an antiseptic 
refrigerator in which to store a stock of meanings for future use, but 
judgment selects and adopts the one used in a given emergency—and 
without an emergency (some crisis, slight or great) there is no call for 
judgment. No conception, even if it is carefully and firmly estab¬ 
lished in the abstract, can at first safely be more than a candidate for 
the office of interpreter. 

3. The judgment when formed is a decision; it closes (or concludes) 
the question at issue. This determination not only settles that 
particular case, but it helps fix a rule or method for deciding similar 
matters in the future; as the sentence of the judge on the bench 
both terminates that dispute and also forms a precedent for future 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


39 


decisions. If the interpretation settled upon is not controverted by 
subsequent events, a presumption is built up in favor of similar inter¬ 
pretation in other cases where the features are not so obviously unlike 
as to make it inappropriate. In this way, principles of judging are 
gradually built up; a certain manner of interpretation gets weight, 
authority. In short, meanings get standardized, they become logical 
concepts. 

Through judging, confused data are cleared up, and seemingly 
incoherent and disconnected facts brought together. Things may have 
a peculiar feeling for us, they may make a certain indescribable impres¬ 
sion upon us; the thing may feel round (that is, present a quality which 
we afterwards define as round), an act may seem rude (or what we 
afterwards classify as rude), and yet this quality may be lost, absorbed, 
blended in the total value of the situation. Only as we need to use 
just that aspect of the original situation as a tool of grasping something 
perplexing or obscure in another situation, do we abstract or detach 
the quality so that it becomes individualized. Only because we need 
to characterize the shape of some new object or the moral quality of 
some new act, does the element of roundness or rudeness in the old 
experience detach itself, and stand out as a distinctive feature. If the 
element thus selected clears up what is otherwise obscure in the new 
experience, if it settles what is uncertain, it thereby itself gains in 
positiveness and definiteness of meaning. 

b) REASON AS A GUIDING EORCE 1 

The original tendencies of man have not been right, are not 
right, and probably never will be right. By them alone few of the 
best wants in human life would have been felt, and fewer still satisfied. 
Original nature has achieved what goodness the world knows as a 
state achieves order, by killing, confining or reforming some of its 
elements. It progresses, not by laissez faire but by changing the 
environment in which it operates and by renewedly changing itself 
in each generation. Man is now as civilized, rational and humane 
as he is because man in the past has changed things into shapes more 
satisfying, and changed parts of his own nature into traits more 
satisfying, to man as a whole. Man is thus eternally altering himself 
to suit himself. His nature is not right in his own eyes. Only one 
thing in it, indeed, is unreservedly good, the power to make it better. 

1 Adapted with permission from E. L. Thorndike, The Original Nature of Man , 
pp. 281-82, 293-96. (Teachers College, Columbia University, New York, 1913.) 


40 


THE WORKER IN MODERN ECONOMIC SOCIETY 


This power, the power of learning or modification in favor of the satis¬ 
fying, the capacity represented by the law of effect, is the essential 
principle of reason and right in the world. 

The problems of whether to cherish a tendency as it is, to inhibit 
it altogether or to modify it in part and, in the last case, the problem 
of just what modification to make, may occasionally be solved easily, 
but oftener demands elaborate study, rare freedom from superstition, 
and both care and insight in balancing goods. Indeed, many of the 
answers which to us now seem self-evident and sure were got only 
by long experiment and the acuity of some sage of the past. 

It seems clear to us now that the extreme cultivation of the 
instincts of submissive and frightened behavior in the masses through 
centuries past restrained progress and denied the common good; we can 
hardly help inferring that the leaders of men were much less humane 
then than now, and perpetuated submission and fear rather than 
curiosity, experimentation and kindliness, wholly in their own selfish 
interest. But greater ignorance rather than greater ill-will was 
probably the major cause of the difference between then and now. 

The so-called “ natural” proclivities of man represent enormous 
changes from his original proclivities. The doctrine that the 
“ natural” is the good, and should be the aim of education, is then 
very different from the doctrine that original nature is right. It is a 
shifting, indeterminate doctrine, meaning one thing in 5000 B.C., 
another thing today, and something else a generation hence. It 
amounts roughly to declaring that the mixed product of original 
nature and the unconscious tuition of common circumstances and 
customs has ultimate value. That is false. Equally false is the 
doctrine that the “ natural” is essentially evil. Much of the so- 
called “natural” iniquity in man is produced by training, the only 
action needed for reform being to abolish the artificial stimuli to the 
evil behavior. Sacrifice of living men to idols, belief in the divine 
right of kings and legal ownership of human beings were natural 
enough in their day, but no special effort is required to keep the 
children of New York City from reverting to such beliefs and practices. 

But in a certain important sense nature is right. 

There is a warfare of man’s ideals with his original tendencies, 
but his ideals themselves came at some time from original yearnings 
in some man. Learning has to remake unlearned tendencies for the 
better, but the capacity to learn, too, is a part of his nature. Instincts 
may be trusted to form desirable habits only under a strong social 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


41 


pressure whereby the wants of one are accommodated to the wants 
of all, but the most elaborate and artificial moral training which a 
social group prescribes is still ultimately an expression of man’s 
nature. 

The impersonal wants, the cravings for truth, beauty and justice, 
the zeal for competence in workmanship, and the spirit of good will 
toward men which are the highest objects of life for man seem far 
removed from his original proclivities. They are remote in the 
sense that the forces in their favor have to work diligently and ingeni¬ 
ously in order to make them even partial aims for even a minority 
of men. But, in a deeper sense, they reside within man himself; 
and, apart from supernatural aids, the forces in their favor are simply 
all the good in all men. 

The original nature of man, as we have seen, has its source far 
back of reason and morality in the interplay of brute forces; it grows 
up as an agency to keep men, and especially certain neurones within 
men’s bodies, alive; it is physiologically determined by the character 
of the synaptic bonds and degrees of readiness to act of these neurones; 
parts of it are again and again in rebellion against the higher life that the 
acquired wisdom of man prescribes. But it has evolved reason and mo¬ 
rality from brute force; amongst the neurones whose life it serves are 
neurones whose life means, if a certain social environment is provided, 
loving children, being just to all men, seeking the truth, and every 
other activity that man honors; the wisdom that criticizes it is its 
own product; the higher life is the choice of its better elements: 
for whatever aberrations and degradations it imposes on man, its 
own virtues are the preventive and cure: and to it will be due whatever 
happiness, power and dignity man attains. 

“Human nature, then, has for its core the substance of nature 
at large, and is one of its more complex formations. Its determination 
is progressive. It varies indefinitely in its historic manifestations 
and fades into what, as a matter of natural history, might no longer 
be termed human. Man’s perceptive and reasoning faculties are 
parts of human nature, as embodied in him; all objects of belief or 
desire, with all standards of justice and duty which he can possibly 
acknowledge, are transcripts of it, conditioned by it, and justifiable 
only as expressions of its inherent tendencies.” 1 These inherent 
tendencies, too, bear the impetus and means to their own improve¬ 
ment. The apostles and soldiers of the ideal in whom service for 

1 Santayana, The Life of Reason. 


42 


THE WORKER IN MODERN ECONOMIC SOCIETY 


truth and justice has become the law of life need not despair of human 
nature, nor pray for a miracle to purge man of his baser elements. 
They are the sufficient miracle: their lives are the proof that human 
nature itself can change itself for the better—that the human species 
can teach itself to think for truth alone and to act for the good of all 
men. 

c) HOW OUR DESIRES INFLUENCE OUR REASON 1 

Perhaps the most widely used [mental] disguise among normal 
persons is that of giving a fictitious, but plausible, explanation for 
conduct, instead of giving the true reason or motive, a device called 
“rationalization.” It is as though we do what we want to do, and 
afterward give a reason that is plausible to the opinions of others, 
as well as to [our mental] censor. And it is surprising how often we are 
ignorant of the true motive. A man will go fishing on Sunday because 
he wants to, but gives as his reason the fact that it is good for his health. 

It is claimed that the economic causes of history are in large part 
unrecognized, which means that they are at least partially disguised. 
Before considering the particular disguises affected, it is desirable 
to analyze what the economic motives are and why they are disguised. 
The economic motive is essentially selfish. Selfishness of course 
finds many other modes of expression than the economic. The 
analysis of this paper does not imply, however, that all economic 
motives are selfish, nor that every selfish economic motive is against 
the common welfare. Nor does the validity of the thesis depend on 
what particular percentages of our economic motives are selfish. 
That we tend to repress the selfish motive is readily seen when we 
observe that we are loath to admit a selfish motive but are proud to 
display an altruistic or a righteous one. The reason for this difference 
in attitude between so-called altruistic and selfish motives arises from 
the fact that a certain amount of subordination of self must be made 
for the common good. There seems to be thus a conflict between 
immediate selfish interests and the common welfare. The selfish 
tendencies are kept in bounds by what Ross and Giddings call social 
control, by what Trotter calls the herd instinct, and by what Sumner 
calls the mores. 

We can all see that if each individual pursued self-centeredly 
and short-sightedly his own selfish impulses, group survival would be 

1 Adapted with permission from William F. Ogburn, “ The Psychological 
Basis for the Economic Interpretation of History,” American Economic Review, 
IX, No. i (Supplement, March, 1919), 291-304. 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


43 


impossible. In society, therefore, there is a conflict between collective 
selfishness and group welfare. This social control or mores or gregari¬ 
ous instinct acts as a sort of censor, represses a good many of the 
selfish tendencies, and elicits praise for altruistic ones. 

That some emotions of groups of people, as well as of individuals 
are displaced in their objectives, has been shown by Max Eastman, 
who has analyzed the idea of the scape-goat so prevalent among 
primitive peoples. He also points out that the I.W.W. have been 
made the scape-goat of the modern world. In this illustration the 
emotion of national anger has been displaced. That economic 
motives may be displaced is seen from an illustration furnished by 
Mrs. Elsie Clews Parsons, a letter from Emanuel Downing to John 
Winthrop in 1645. 

A warr with the Narragansett is verie considerable to this plantation 
ffor I doubt whither yt be not synn in us hauing power in our hands, to 
suffer them to maynteyne the worship of the devill which theire paw wawes 
often doe; 2 lie, if upon a just warre the Lord should deliver them into 
our hands, wee might easily haue men, women and children enough to 
exchange for Moores, which will be more gaynfull pilladge for us than we 
conceive, for I doe not see how wee can thrive until we get a stock of slaves. 

It is true that Emanuel Downing did not in this letter disguise his 
economic motive very well, but very probably in a good many religious 
wars the economic movement has been obscured. Thus various 
modern historians have uncovered the economic factors in the crusades 
of which people had been largely unconscious. Engels and Bernstein 
have similarly pointed out the economic nature of the Reformation. 
Perhaps in these cases there was a certain amount of disguise of 
economic factors by displacement on the religious objectives. 

The displacement of the economic motive on to symbols deserves 
special notice. Such symbols are usually of a highly ethical nature. 
Thus the statue of liberty in New York harbor is a symbol, as indeed 
are the terms liberty and freedom, which furnish in connection with 
immigration at least in some cases disguised outlets to economic 
motives. During the past century the United States has prospered 
materially because of immigration. It has been called “a golden 
stream,” because the need for labor and development was so great that 
the bundle of scanty clothing on the back of the immigrant was 
truly a bag of gold. But it will be interesting to see whether these 
altruistic symbols in connection with immigration will be as popular 
in the coming years when the country will have become more thickly 


44 


THE WORKER IN MODERN ECONOMIC SOCIETY 


populated. A careful reading of American colonial history will show 
that the terms freedom, independence, liberty, for which the Revolu¬ 
tionary War was fought, had a surprisingly large number of specific 
economic determinants. The Constitution of the United States is a 
symbol for the bulwark of our conservatives; and it is very probable 
that in cases where economic motives are responsible for the reverence 
for this symbol, they will be so quite unconsciously. 

By far the most prevalent device, it seems to me, employed in 
disguising the economic motives of history, is rationalization. This 
term is used, it is recalled, when a fictitious but plausible reason is 
given the place of the real one. A somewhat humorous illustration 
is taken from Calhoun’s A Social History of the American Family. 
Nearly a century ago a Mr. Gloyd of South Carolina made the follow¬ 
ing plea for the introduction of cotton mills: 

Here will be found a never-failing asylum for the friendless orphans 
and the bereft widows, the distribution of labor and the improvements 
in machinery happily combining to call into profitable employment the 
tender services of those who have just sprung from the cradle as well as 
those who are tottering to the grave, thus training up the little innocents 
to early and wholesome habits of honest industry and smoothing the wrinkled 
front of decrepitude with the smile of competency of protection. 

In the profit-sharing schemes of recent years the selfish motives 
of employers were rationalized, as has been pretty well shown in a 
number of studies. Similarly an element of rationalization is found 
in the adoption of welfare work in connection with industrial establish¬ 
ments, and in the imperialists’ argument the true motives are some¬ 
times rationalized. These illustrations might be multiplied in great 
number. 

6 . INDIVIDUAL DIFFERENCES 

a) DIFFERENCES IN GENERAL CHARACTER AND INTELLIGENCE 1 

When we stand off and abstract those characteristics which appear 
universally in all individuals, human nature appears constant. But 
there are marked variations in the specific content of human nature 
with which each individual is at birth endowed. Put in another way, 
one might say that to be a human being means to be by nature pugna¬ 
cious, curious, subject to fatigue, responsive to praise and blame, etc., 

1 Adapted with permission from Irwin Edman, Human Traits and Their Social 
Significance , pp. 186-88, 208-9. (Copyright by the author, 1920. Published by 
Houghton, Mifflin & Co., Boston.) 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


45 


and susceptible to training in all these respects. By virtue of the 
fact that we are all members of the human race, we have common 
characteristics; by virtue that we are individuals , we all display specific 
variations in specific human capacities. There is, save abstractly, no 
such thing as a standard human being. We may intellectually set 
up a norm or standard, but it will be a norm or standard from which 
every individual is bound to vary. 

The fact that individuals do differ, and in specific and definable 
respects, has most serious consequences for social life. It means, 
briefly, that while general inferences may be drawn from wide and 
accurate observations of the workings of human nature, these infer¬ 
ences remain general and tentative, and if taken as rigid rules are sure 
to be misleading. Theories of education and social reform certainly 
gain from the general laws that can be formulated about original 
human traits, fatigue, memory, learning capacity, and the like. But 
they must, if they are to be applicable, take account also, in a precise 
and systematic way, of the variety of men’s interests and capacities. 
To this fact of variety in the original nature of different men social 
institutions and educational methods must be adapted. Arbitrary 
rules that apply to human nature in general do not apply to the specific 
cases and specific types of talent and desires. Educational and social 
organizations can mould these, but the results of these environmental 
influences will vary with individual differences in original capacities. 
We can waste an enormous amount of time and energy trying to train 
a person without mechanical or mathematical gifts to be an engineer. 
We not only save energy and time, but promote happiness, if we can 
train individuals so that their specific gifts will be capitalized at one 
hundred per cent. 

Individuals differ, it must be further noted, not only in specific 
traits, but in that complex of traits which is commonly called “ intel¬ 
ligence.” In the broadest terms, we mean by an individual’s intel¬ 
ligence, his competence and facility in dealing with his environment, 
physical, social, and intellectual. This competence and facility, in 
so far as it is a native endowment, consists of a number of traits present 
in a more or less high degree, traits, for example, such as curiosity, 
flexibility of native and acquired reactions, sociability, sympathy, and 
the like. In a sense an individual possesses not a single intelligence, 
but many, as many as there are types of activity in which he engages. 
But one may classify intelligence under three heads, as does Thorn¬ 
dike: mechanical intelligence, involved in dealing with things; social 


46 


THE WORKER IN MODERN ECONOMIC SOCIETY 


intelligence, involved in dealing with other persons; and abstract 
intelligence, involved in dealing with the relations between ideas. 
Each of these types of intelligence involves the presence in a high 
degree of a group of different traits. Thus, in social intelligence, a 
high degree of sympathy, sensitivity to praise and blame, leadership, 
and the like, are more requisite than they are for intelligent behavior 
in the realm of mechanical operations or of mathematical theory. 

A person may be highly intelligent in one of these three spheres and 
mentally helpless in the others. Thus, a brilliant philosopher may 
be nonplused by a stalled motor; a successful executive may be a 
babe in the realm of abstract ideas. 

b) DIFFERENCES IN SPECIAL CAPACITIES 1 

One of the most striking of individual differences concerns the 
rate of perception. It has been found that certain persons are able to 
perceive with much greater rapidity, and, at the same time, with no 
less accuracy, than others. Differences of perception occur in con¬ 
nection with all the senses. Suppose, for example, that several people . 
see the same cinematograph film, and afterwards describe as minutely 
as possible everything that they have seen. It will be found that all 
do not see as much as some, and, if the number of persons who see the 
film be considerable, say 50, it will be found that some see roughly 
twice as much as others. As a result of experiments with University 
graduates and undergraduates, men and women, in which the “sub¬ 
jects” were required to watch small moving pictures and afterwards 
to report what they had seen, I found that some were able to report 
three times as many items as others; and it seemed clear, for various 
reasons, that this was due to a more rapid vision. Such a difference is 
interesting, seeing that all the “subjects” had had much the same 
intellectual training. 

The term motor capacity is clearly complex. It is necessary to 
specialize capacity for movements in at least three directions. We 
may speak of (1) capacity for precision of movement, (2) capacity 
for complexity of movement, and (3) capacity for strength of movement. 
Laboratory tests may be devised to discriminate between persons in 
all three capacities. I shall mention simply The Martin Strength Test 
as a means for bringing to light individual differences in the third of 
these. 

1 Adapted with permission from Bernard Muscio, Lectures on Industrial Psychol- 
ogy , pp. 95, 96, 99-102. (New York: E. P. Dutton & Co., 1920.) 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


47 


Still another factor of importance here is a person’s attitude 
towards monotony and variety. This problem has not been investi¬ 
gated to any great extent. We know from our own experience that 
the feeling of monotony is disagreeable, and we may therefore infer 
that it has a bad effect upon efficiency. Similarly, variety is often 
pleasing, and so far may be said to be advantageous to efficiency. It 
seems likely, however, that persons may be divided into two classes 
according to their attitude to monotony and variety. There seem 
to be some who welcome work which would ordinarily be called 
monotonous. Such persons find variety disagreeable. They like to 
repeat the same process over and over again, and day by day their 
lives follow the same habits. Others hate monotony. These persons 
find a difficulty in fixing any habits, except the habit of roving. They 
move from one sort of work to another, or, if they finally settle down 
to one class of labour, are always changing their employer. Now, in 
industry some kinds of work are more monotonous than others. The 
work of a commercial traveller, for example, exhibits considerable 
variety. On the other hand, the work of a weight-recorder on a 
weigh-bridge is fairly monotonous. It is probable that, as we learn 
more concerning these facts, it will be possible to utilise our knowledge 
for the increase of industrial efficiency. 

There is another quality concerning which individuals show great 
differences, which is of considerable importance to industry. Persons 
may be divided into two classes according to their type of attention. 
Some have a capacity for extraordinarily concentrated attention. 
They are able to inhibit all impressions irrelevant to their purpose at 
any moment, even if such impressions are strong. A friend of mine 
tells me that he is able to do complicated mental work without trouble 
even if a piano is being played at the same time in the same room. 
This would be an absolute impossibility for most persons. In con¬ 
trast with this concentrated type of attention there is a more compre¬ 
hensive type, one with a large “spread,” as it were, and a person with 
this type of attention can keep in view at any one moment all parts of 
a complex situation, and re-act to one in particular, when the demand 
arises, without losing grasp of the others. Such a type of attention is, 
perhaps, very useful for the tramcar driver: a man with the con¬ 
centrated type might attend too much to some point in the traffic. 
Neither type can be said to be the better. They are simply different; 
and for some kinds of industry one is the more suitable, while for 
other kinds of industry it is the other that is required. This differ- 


4 8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


ence between individuals is an extremely important one from an 
industrial point of view. Besides persons who exhibit in an especial 
degree one or other of these two types of attention, there are, of course, 
those whose capacity for continuously attending, with whatever type 
of attention, is very poor. 

c) AN INTELLIGENCE RATING BY OCCUPATIONS 1 

[Note. —The following graphic rating was made as the result of an 
intelligence test given approximately 42,000 soldiers in the national 
army, classified by occupations. It is given here without venturing 
authoritative interpretation simply as an illustration of one attempt 
to apply experimental technique to the problem of determining and 
classifying individual differences. Obviously the most diverse 
conclusions might be drawn on the basis of the scale as it stands. 
In the first place, the kind of “intelligence’ 5 thus classified would 
depend on the character of the test itself: i.e., could the test given be 
regarded fairly as a test of “intelligence” or only of special abilities? 
Assuming it was a test of “intelligence,” to what extent does the 
rating depend on time allowance rather than on actual ability or 
capacity ? To what extent does it indicate differences in environment, 
training, and opportunity, rather than of innate capacity: e.g., does 
a man in modern society drift into the status of a “ laborer ” because he 
has “C—” ability, or is he able to score only a “C—” rating because 
his whole environment from infancy in a laboring-class family has 
handicapped the development of the sort of faculties this particular 
test demands ? Psychologists at the present time are wholly agreed 
on only one thing with regard to the scientific measurement of 
individual differences—the need of caution and healthy skepti¬ 
cism.— Ed.] 

The graph opposite shows the median and range of the middle 
50 per cent for each occupation. In this graph the occupations are 
arranged in order from inferior to superior based upon the position of 
the median score in the letter-grade intervals, irrespective of the 
number of cases from which the median was calculated. The positions 
of the median and quartile scores were computed from the percentage 
distributions of letter grades. 

1 Taken from Memoirs 0} the National Academy of Sciences, XV, 829 (Govern¬ 
ment Printing Office, 1921.) 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 


49 



c- 


Laborer . . 
Cen. miner 
Toamster . 
Barber . . 


J Cen 
I Toa 
Bar 


C < 


Horsesboer • . , 
Bricklayer . . . 
Cook • • • » • 4 

Baker . 

Painter .... 
Gen. blacksmith 
Gen. carpenter . 
Butcher .... 
Gen. machinist . 
Hand riveter . . 


Gen. plpe-PI .... _ 






Gunfimlt/h ........ ■ 



CM 


Gen. mechanio • . • . 
Gen. auto repairman . 
Auto engine mechanio 
Auto assembler . . . 
Ship carpenter ... 
Telephone operator . 


Concrete const, foreman 

Stock-keeper . 

Photographer ...... 

Telegrapher ...... 

R.R. clerk . 

Piling clerk . 

Gen. clerk.. 

Army nurse.. 

Bookkeeper . . 


B 


Dental officer . . . 
Mechanical draftsman 
Accountant * . . . . 
Civil engineer . . . 
Medical officer . . . 


A -^Engineer officer 

1 c^ 


I i>- I 5 


1 c+l b I a I 
































































5° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


PROBLEMS 

1. What are the important conclusions to be drawn from James’s discussion 
of human energy in the first selection ? Do they throw any light on 
problems of incentive in industry ? 

2. What is meant by the statement that “ideas” release and stimulate 
energy? Suggest at least a half-dozen examples of the influence of 
“ideas” on energy ( a ) in social life, ( b ) in business. 

3. Is there such a thing as “fatigue of the will”? If so, is it impor¬ 
tant ? 

4. “Production is inefficient because people are naturally lazy.” “Produc¬ 
tion is inefficient because we haven’t worked out sufficiently stimulating 
methods of carrying on work.” Which is true? 

5. “Laziness is mental, rather than physical.” Is this true? Is it 
important ? 

6. Name five kinds of incentive which seem to you might be effective 
and of which the business world might make greater use. 

7. William James once wrote an essay which he called “The Moral Equiva¬ 
lent of War.” What does the phrase mean ? Would it be possible to 
find a “moral equivalent” of strikes? of profiteering?. of other industrial 
difficulties ? 

8. If you change habits, do you change “human nature” ? 

9. What are the “folkways” and the “mores,” and what is their importance 
in economic life ? 

10. Someone has said that the chief difficulty in securing co-operation in 
industry today arises from the fact that different groups in modern 
economic life have developed distinct sets of “mores.” Do you think 
there is anything in the idea ? 

11. Someone else says the difficulty arises because technology changes 
faster than the “mores.” Do you see anything in this? 

12 What is the relation between the “mores” and the law? 

13. “Machine industry and the pecuniary system are responsible for 
modern ‘mores.’ So money and the machine direct the future of 
society.” Do you consider this an adequate statement ? 

14. “The class of routineers is larger than that of the conservatives. What 
the routineer thinks is the heavens above him is nothing but the roof.” 
What is the difference between the “routineer” and the “conservative” ? 
Which do you find more often in business ? In politics ? 

15. “We are apt to reverence our ancestors’ independence and to ignore 
the originality which inspired it. Tradition should be a reverent record 
of those crucial moments when men burst through their habits.” 
What is tradition actually ? 

16. To what extent are men “rational” in their thinking? To what 
extent does conscious thought direct men’s lives ? 


SOME IMPORTANT ASPECTS OF HUMAN BEHAVIOR 51 

17. Suppose you were seeking an “impartial” opinion about an industrial 
dispute. What would you want to know about your informant before 
accepting his judgment ? Why ? 

18. “The ‘herd instinct’ is important in modern life, but every man today 
belongs to many ‘herds.’ His loyalties to different ‘herds’ may con¬ 
flict.” Does this make the problem of co-operation in economic 
activity more or less difficult ? 

19. Can you suggest a psychological explanation of why some workers 
join trade unions and others do not; why some strike while others 
become “ scabs ” ? 

20. “Economic classes are usually defined in terms of income or occupation. 
A ‘psychological’ classification would be more significant.” Can you 
suggest such a classification ? 

21. What importance for industry has each of the following: imitation, 
conformity, rivalry, hero-worship? Are these “instincts” or only 
names for ways of acting ? 

22. What do you think of the possibility of working out a scientific technique 
for measuring (a) intelligence, ( b ) capacity ? Would it be of any value 
if we could ? Would it determine the relative importance of inheritance 
and training ? 


CHAPTER III 


THEORIES OF HUMAN NATURE AS TOOLS 
FOR UNDERSTANDING INDUSTRIAL 
RELATIONSHIPS 

The earlier chapters of this part have considered some of the 
many factors which enter into the mental make-up of modern man 
and which help to determine his behavior. The present chapter 
is designed to draw together in some measure some of these scattered 
aspects, and to suggest possible ways in which theories of human 
behavior may help to a better understanding of the human problems 
involved in the organization of economic activity. 

The separation of “aspects” which has so far been followed is, 
of course, purely artificial. Men act in life as complete units, not 
as collections of separate traits. It is impossible in fact to isolate 
what is inborn from what is acquired, what is social from what is 
individual, or to say that in a given situation one “instinct” operates 
while others do not. The whole equipment operates in behavior 
as a single thing. For purposes of understanding men in industry, 
also, there is no distinction between “social” and “individual” 
psychology, since we have no occasion to deal with men on a desert 
island. The selections which follow are attempts to picture man’s 
character as a unified whole in his relation to his environment. 

The three selections give three different interpretations of man’s 
mental make-up: differences which might lead to quite different 
judgments on th£ wisdom or unwisdom of particular economic policies. 
It will be noted, however, that the first two differ from the third 
more than they differ from each other in the importance they ascribe 
to inborn characteristics and the attention it is necessary to give 
them in social and industrial life. Most of the issues raised are still 
in the realm of unsettled questions. They are inserted here (a) to 
focus more completely questions raised in the earlier chapters of this 
part, (b) to introduce ideas and issues which will be useful in analyzing 
the later material of the book . 1 

1 It is expected that this chapter, and Part One as a whole, will be especially 
suggestive in the interpretation of Parts Two, Five, and Seven, although its 
subject-matter should be regarded and discussed as an underlying element 
throughout the whole book.— Ed. 


52 


THEORIES OF HUMAN NATURE 


53 


i. HUMAN BEHAVIOR IN TERMS OF WISH-FULFILMENT 1 

The individual may be roughly symbolized for our purposes 
(Fig. i) by a circle inclosing arrows representing impulses, wishes, 
strivings, “motor sets,” as Holt phrases it. These impulses do not 
tend at first to be introspective. Many of them are at mutual odds, 
but they are not even organized enough to realize much mutual 
conflict. But, because the directions of these impulses are widely 
distributed, there is an approximate equilibrium, an unstable equilib¬ 
rium, such that a stimulus from nearly any quarter will bring a quick 
response in that direction, yet diverted with comparative ease in 
another direction by a different stimulus. The undeveloped person¬ 
ality is suggestible, whether child or savage. 



»>■- y Temperament 


Fig. i. —Symbol of an undeveloped personality. A general trend to the right 
is indicated, but the wishes are unorganized, at cross-purposes. The dark center 
represents the original font from which life-energy (soul, libido, elan) wells up and 
out at various levels. (Cf. Jelliffe, The Technique of Psychoanalysis, diagrams.) 


Yet even in undeveloped personalities there is often a “trend” 
or “bent”—a predominance of certain strong instincts, or groups of 
impulses which, by composition of forces, give the individuality a 
certain initial direction. In any case, the equilibrium is soon broken, 
whether from within or from without; and certain desires are sub¬ 
ordinated more or less permanently, more or less successfully, to others. 
Crude organic impulses are refined, combined, recombined into the 
more complex interests, specific desires and wishes. The real dynam¬ 
ics of these interests still, however, root back into primitive, often 
unconscious, sources. 

1 Adapted with permission from an article by Thomas D. Eliot in the 
American Journal of Sociology, XXV (November, 1920), 334 ff. 






54 


THE WORKER IN MODERTN ECONOMIC SOCIETY 


The formation of personality may be stated in terms of the 
organization of its impulses into a working whole, just as the formation 
of a state may be stated in terms of the harmonization of conflicting 
interests (see Fig. 2). Some impulses are suppressed, some are 
diverted, some are sublimated, some are encouraged and draw others 
to them. Some outlaw impulses escape, or remain concealed in 
respectable company. The whole becomes shot through with a 
purpose or design, like the lines of force in a magnetic field. Various 
processes of socialization may be interpreted in terms of wish-fulfilment 
mechanisms, ofttimes unconscious. Whenever an environment is 


(c) TossXte s 
Psychoses', 'g/ 
Suppfesseo 51 



X&b W\.sRes 

vT\ei> xtAo a.'o. 

yyy y Effeclwe 

L\fe-P\rcpose 
IrvPex&sts 

jTfyfei \o Avoid Trv^xjVy 
X>o LZxfe-Tvx:pose 

(SubsUlvTtoxv, 


Fig. 2.—Symbol of a developed personality. Strong polarization of impulses 
into a life-purpose; other impulses (a) expressed as hobbies, ( b ) modified to serve 
main purpose, (c) suppressed, and ( d ) dodging or delinquent. 


such as to stimulate a similar set of behavior mechanisms with similar 
effects in a considerable number of people, group formation has its 
natural soil. 

The same individuals may be aligned in scores of different ways, 
with the same or other individuals, for the fulfilment of sundry 
strivings (see Fig. 3). 

A group of any degree of complexity may be, like the organized 
personality of Figure 3, roughly likened for illustrative purposes to a 
magnetic field, polarized around the major purpose of the organization, 
which is a net resultant of the specific stimuli, the nature of the units 
affected, and the general environment; the environment would 
(in the case of the group) include the wishes of persons and groups 
external to the immediate group, such as contributors, prospective 
members, “public opinion.” 







theories of human nature 


55 



groups were selected to serve the individuals’ dominant purpose. 













56 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Groups are regrouped in larger groups, with less definite bonds of 
common interest but interrelated by individuals who belong to more 
than one subgroup (see Fig. 4). 

Whether a purpose is ostensibly or actively dominant in a group 
depends upon the general social situation, which therefore determines 
which groups “fall off” in membership. Large circles in the diagram 
indicate roughly larger groups or classes within which there are 


“MiiAle Class” 



/ 



PabaoUsta 


Fig. 4. —Crude symbol of group interrelation based on wish-fulfilment 


certain common wishes and therefore interlocking membership. 
Each smaller group is symbolized by a small circle. Overlapping 
circles represent interrelated groups. Infinite dimensions would be 
needed to represent the actual situation. Net resultant purposes of 
groups are indicated by heavy arrows, lesser motives by smaller 
arrows. The direction of arrows represents, in a crude way, the 
direction of each interest with relation to the broad contrasts between 
social classes. 















THEORIES OF HUMAN NATURE 


57 


The analogy is that of composition of forces in physics: the class 
purposes are resultants of group purposes; group purposes are result¬ 
ants of individual wills; and individual wills are resultants of the 
conscious and unconscious wishes of the individual in relation to any 
given situation. 

The more thorough and complex the system of interests and of 
interrelated fulfilling groups, the more “advanced” the evolution 
of the society. Progress, however, of course involves increasingly 
harmonious and economical readjustments, rather than mere com¬ 
plexity. 

While competition for membership may reach the point of conflict 
when membership becomes an end in itself, group conflicts are usually 
due to mutually antagonistic wishes, either with respect to a common 
interest (such as hunting-grounds or a doubtful state), or with respect 
to some policy or behavior which is doing or will do violence to the 
interests of one or the other group (such as trade relations with 
Russia). 

It may often occur that, without the existence of another group 
whose “liberty” (wish-fulfilment) is curtailed by the very existence 
of its antagonist, either group would be entirely “normal.” That is 
why the ideal business man and the ideal socialist are both so lovable 
when you take them separately. 

When two groups have a grievance or conscious thwart in common, 
they will make common cause in their immediate activity, even though 
logically at odds in other respects; for the immediate activity is due 
to a wish which strives for fulfilment because of some current stimulus 
or thwarting, and the other differences, being less insistent for adjust¬ 
ment or satisfaction, are subordinated or suppressed into a less 
conscious sphere. Party and church, inter-college and sectional 
rivalries, inter-racial and international realignments, especially in 
the recent and present wars, suggest themselves as examples. 

Groups with a similar interest not selfish to each group but common 
to both and capable of joint fulfilment will rapidly and easily amalga¬ 
mate in the absence of egotistic minorities, or eventually in spite of 
them. The fusing of suffrage organizations, of parties, and of corrupt 
interests are examples in politics. 

When two groups both have wishes, and their fulfilment is mutually 
exclusive, both are thwarted acutely and there is war—orderly or 
violent as the case may be. It is a function of civilized government 
to make such struggles few and orderly. Court decisions and arbitra- 


58 THE WORKER IN MODERN ECONOMIC SOCIETY 

tion boards attempt to harmonize thwarted interests—and occasionally 
succeed. They repress the crude pugnacity of injured personalities, 
and, theoretically, give it a channel for relatively sublimated expression. 
Legislation and treaties attempt compromises, reciprocal concession, 
and substitution just as a mother does between two quarreling children. 
Reason is, for good or ill, secondary to wish-fulfilment. Witness 
the Peace Conference. 

The so-called “social mind” ordinarily develops more slowly 
than that of individuals, because there are infinitely more complex 
adjustments and readjustments to be made before internal friction 
can be eliminated and a combination or organization of wishes can 
be found which will afford a modus vivendi —a psychological basis 
for group life. 

If a person finds a group to which he belongs committed to some 
policy or conduct which would thwart another of his interests he may 
have a mental conflict. He must take his choice. He may try to 
“ swing his group.” He may succeed if he can find or create a powerful 
enough faction. He will not often succeed if there is a real thwart or 
“grievance” widespread and dominant among the group. The most 
plausible arguments will not much avail, nor will the most logically 
unanswerable refutations of the group’s “ reasons.” If he can persuade 
neither himself nor the group to reconcile, repress, or gloss over the 
conflicting wishes he must then sacrifice his personal wish to his 
loyalty-wish or herd instinct; or, he must secede or “get kicked 
out,” and if possible join another group, whose dominant desires 
are similar to his own. 

If a man finds two groups to which he belongs striving for things 
which are mutually antagonistic he must make a similar choice. 

When some unforeseen set of conditions suddenly thwarts in a 
large number of people a certain set of desires which were previously 
fulfilled and therefore less conscious, new groupings are likely to 
develop, old groups are likely to “lose interest,” and alignments 
shift as attention concentrates on the motives now thwarted, which 
thereupon become the dominant motives in all group activity. Old 
grudges now repressed project their cumulative affects into new 
channels and upon new objects, often over-determining the new group 
behavior all unconsciously. 


THEORIES OF HUMAN NATURE 


59 


2. A PSYCHOLOGICAL ANALYSIS OF INDUSTRIAL 

UNREST 1 

Human action, shortly after birth, tends to find itself exercising 
along certain stereotyped behavior channels, and so, to avoid that 
border land of pseudo-metaphysical speculation touching the parentage 
of these tendencies, I have selected for strict phrasing instead of 
“instincts,” the words “unlearned tendencies to action” as describing 
the original physical baggage, the so-called instincts, which accom¬ 
panies the remarkable anatomical contraption we have called man. 
However, I shall use “instincts” and “unlearned tendencies” as 
equivalent expressions. 

The importance to me of the following description of the innate 
tendencies or instincts lies in their relation to my main explanation 
of economic behaviors which is: 

First, that these tendencies are persistent, are far less warped or 
modified by the environment than we believe, • that they function 
quite as they have for several hundred thousand years, that as motives 
in their various normal or perverted habit forms they can at times 
dominate singly the entire behavior and act as if they were a clear 
character dominant. 

Secondly, that if the environment through any of the conventional 
instruments of repression such as religious orthodoxy, university mental 
discipline, economic inferiority, imprisonment, physical disfigurement, 
such as short stature, hare lip, etc., repress the full psychological 
expression in the field of these tendencies, then a psychic revolt, a 
slipping into abnormal mental functioning, takes place, and society 
accuses the revolutionist of being either wilfully inefficient, alcoholic, 
a syndicalist, supersensitive, an agnostic, or insane. 

I am willing to admit I am about to hang a psychological wreath 
about the neck of the rolling stone, the law breaker, the mentally 
unbalanced. As Trotter has said, if we should revamp our con¬ 
ventional idea of normality by a study of human evolution, there 
might be a sensational change in the general social character of the 
population of our institutions of detention. An inmate of an asylum 
in answer to the bromidic question, “Why are you here, you look all 
right?” said: “Lady, I’m in the minority, that’s all.” The minority 
membership runs true from St. Francis of Assissi to the MacNamaras. 
Perhaps one should stop most seriously to emphasize this concept 

1 Adapted with permission from Carleton H. Parker, The Casual Laborer , 
pp. 31-37, 42, 45-52. (Harcourt, Brace & Co., 1920.) 


6 o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


of a new human normality and also to appreciate the handicap to 
discussion which comes whenever every analyzer at a round table 
has a very different brand of human normality in mind. There is 
that theoretical one hundred per cent normality which is gained for 
individuals by free mobility plus full environmental equipment of 
persons and instruments and which results in a harmonious and full 
expression of their psychic potentialities. 

A second normality would be produced by that human mobility 
and freedom, and that environment, which would give far more 
unconventional experimentation, far more wisdom, than we now 
have, but not the amount which would crack human nature by 
hurrying its change of mores too much, or destroy those institutions 
of civilization which could be modified with some hope of their higher 
usefulness. Conscious that man will change, if he is to change, to 
this compromise normality concept, it is such a normality that I 
have in mind when I use the term. It is in the interests of such 
a new Darwinian normality that the following list of the innate 
and unsuppressable tendencies is presented. The list is a tentative 
and naturally an incomplete enumeration of those tendencies which 
we can, I think, safely use in a trial diagnosis of present day affairs 
and irregularities. 

A tendency to be sexual and under stereotyped stimuli to follow 
a universally observed method of gratifying that desire 

To be hungry 

To think (to go over into multiform activity) 

To experience mother-love, etc. 

To be gregarious 

To be curious (to manipulate, to dissect, to experiment) 

To fear 

• To collect, to hoard, to gain and hold property 

To migrate, to be mobile 

To feel revulsion at confinement (cause of prison psychosis) 

To dislike the unmeasured, the unlimited, to dislike to lie or die 
in the open 

To fight, to be near fighting, to call for the knock out, to be cruel, 
to be pugnacious 

To lead a group, a gang, a class, to be elected to political office 

To follow a leader 

To display, to be ostentatious, to be vain, to be unconventional 
in dress 


THEORIES OF HUMAN NATURE 


61 


To be workmanlike, to show a quality sense, to show a harmony 
sense in self-expression 

To hunt (the sex chase, persecution of the weaker, to bully) 

To vocalize 

For sex, for migration, gregariousness, collecting, leadership, 
etc., there seem methods of satisfying which not only feel right 
and just to our experienced selves, but which seem to have a place 
in the scheme of conduct of biologically vigorous persons. 

So we ascribe a high degree of normality to these methods of 
satisfying. In contrast to these in reality rare if desirable ways, are 
countless ways of gratification which are compromises between a fair 
approximation of this norm and a gratification so pitiful or so psychi¬ 
cally costly or nauseatingly revolting or so egotistically brutal that 
much of orthodox religion is devoted to the simple task of either 
hiding these or damning them to death. Denied a normal expression 
one is said to sublimate the energy, evaporate it off through devotion 
to a different satisfaction. One is also said to compensate through 
a kindred substitute-activity for the thwarting of the direct instinct 
expressions. 

If we should sympathetically take the tentative list of innate 
human proclivities here presented, and using them as norms investigate 
the infinite detail of the lives of one hundred children in the period 
between birth and their year of adolescence, we should uncover 
literally thousands of serious complexes and fixations. Mothers, 
fathers, teachers, ministers, playmates, the sophisticated street idler, 
all taken together, Trotter’s social censor—conventional society— 
gives the repressive force. Fear of punishment by parent or 
teacher, fear of public scorn, fear of a playmate’s ridicule, fear of 
being caught kissing one’s mother, fear of the policeman, of being 
uninvited, the educated fear of the darkness and its population of 
devils, fear of the unknown and the limitless, fear of a cheap funeral, 
fear of being out of style, fear of being off the band wagon, fear 
of not being right, all these give us our psychic hot points, our 
obsessions. 

An interesting generalization can be made here. These guilt 
obsessions result almost universally in an inferiority phobia, a “Minder- 
wertigkeit,” a feeling of guilt. This inferiority-realization creates 
two types of reaction—either the person affected is weak-kneed, 
submissive, yellow streaked, a back-slider, a fair weather friend; or 
secondly, he becomes a strange creature who compensates for his 


62 


THE WORKER IN MODERN ECONOMIC SOCIETY 


inferiority by an aggressive ordering of his life as if he were imbued 
with the opposite character virtues. Among notable inferiority 
compensations of this class are: bragging of the timid; bravery of 
the physically small; cheerfulness of the dying (tuberculosis psy¬ 
chosis); washing mania of the immoral; the vociferously “fair” to 
laborers; ostentatious interest of cotton mill owners in the welfare 
of the child workers; the peace work of Carnegie in contrast to his 
Homestead strike policy; acquisition of the dyspeptic; dilettante 
intdlectualism of the self-made; patriotism of the unheroic; generosity 
of the saloon-keeper to the poor. 

By this devious path I come now to the character of evolution in 
the field of modern industrialism. 

The powerful forces of the working class environment which 
thwart and balk instinct expression are suggested in the phrases 
monotonous work, dirty work, simplified work, mechanized work, 
the servile place of labor, insecure tenure of the job, hire and fire, 
winter unemployment, the ever found union of the poor district with 
the crime district, and the restricted district with prostitution, the 
open shop, and labor turnover, poverty, the breadlines, the scrap 
heap, destitution. If we postulate some twenty odd unit psychic 
characters which are present under the laborer’s dirty blouse and 
insistently demand the same gratification that is with painful care 
planned for the college student, in just what kind of perverted com¬ 
pensations must a laborer indulge to make endurable his existence ? 
A western hobo tries in a more or less frenzied way to compensate for 
a general all embracing thwarting of his nature by a wonderful con¬ 
centration of sublimation activities on the wander instinct. The 
monotony, indignity, dirt and sexual apologies of, for instance, the 
unskilled worker’s life, bring their definite fixations, their definite 
irrational inferiority obsessions. The balked laborer here follows one 
of the two described lines of conduct: First, he either weakens,, 
becomes inefficient, drifts away, loses interest in the quality of his 
work, drinks, deserts his family, or, secondly, he indulges in a true 
type-inferiority compensation and in order to dignify himself, to 
eliminate for himself his inferiority in his own eyes, he strikes or brings 
on a strike, he commits violence or he stays on the job and injures 
machinery, or mutilates the materials; he is fit food for dynamite 
conspiracies. He is ready to make sabotage a part of his regular 
habit scheme. His condition is one of mental stress and unfocussed 
psychic unrest, and could in all accuracy be called a definite industrial 


THEORIES OF HUMAN NATURE 


63 


psychosis. He is neither wilful nor responsible, he is suffering from a 
stereotyped mental disease. 

If one leaves the strata of unskilled labor and investigates the 
higher economic classes he finds parallel conditions. There is a 
profound unrest and strong migratory tendency among department 
store employees. One New York store with less than three thousand 
employees has thirteen thousand pass in a year through its employ. 
Since the establishment in American life of “big business” with its 
extensive efficiency systems, its order and de-humanized discipline, 
its caste system, as it were, there has developed among its highly 
paid men a persistent unrest, a dissatisfaction and decay of morale 
which is so notable and costly that it has received repeated attention. 
Even the conventional competitive efficiency of American Business 
is in grave question. I suggest that this unrest is a true psychosis, a 
definite mental unbalance, an efficiency psychosis, as it were, and has 
its definite psychic antecedents—and that our present moralizing and 
guess-solutions are both hopeless and ludicrous. We blindly trust 
that a 10 per cent wage increase will cure that breakdown which a 
sympathetic social psychiatrist might, if given all power, hope merely 
to alleviate. Other economic classes suffer from the limited outlet 
their environment affords—a narrow thwarted life drives unmarried 
women into France as nurses. Students, disappointed and balked by 
the impersonal and perfunctory instruction given in American univer¬ 
sities, compensate by an enthusiasm over athletics and student 
activities which, if partly expended in intellectual exercise, would 
revolutionize society. College athletics is a sort of psychic cure for 
the illness of experiencing a university education. 

The most notable inferiority compensation in industrial life is 
the strike. The strike has two prerequisites—a satisfactory obsession 
in the labor mind, and a sufficient decay in the eyes of labor of the 
prestige of social norms, to allow the laborer to make those breaches 
of law and convention which a well-run strike of today demands. 
The violence of the strike varies directly with both the psychic 
annoyance due to the obsession and with the extent of decay in the 
striker’s eyes of conventional mores. Veblen has shown how modern 
machine technology gives a causal, deterministic bias to labor class 
thinking and how this bias makes impossible the acceptance at face 
value of the mystic, anthropomorphic pretensions of law and business 
rights. These pretensions seem fitted to endure only in a society 
experiencing a placid, unaroused and ox-like existence, or in one where 


64 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the prestige of law and order is maintained by a large professional 
army and a policy of frightfulness not rendered inefficient by the 
inopportune presence of emotional religions. Neither of these 
prerequisites is present in America, so our strikes tend to reflect 
without serious modification both the psychic ill-health generated 
by the worker’s experience, and the rapid and interesting decay of 
the respect for and popularity of the law, the courts, property, and the 
rich man. 

3. HUMAN NATURE AS A PRODUCT OF TRAINING 

AND ENVIRONMENT 

a) NATURE LESS IMPORTANT THAN NURTURE 1 

Apart from all experience, we do tend to fear, to love, and to 
acquire certain particular things under certain particular circum¬ 
stances; but what these particular things and particular circumstances 
are is not perfectly known. The fears, the loves, the acquisitiveness 
which are great social forces, which really do concern the social psychol¬ 
ogist, are not these naked original propensities; but these propensities 
made over and standardized by contact from the days of our births 
with other people, who got their dispositions in question by a similar 
indissoluble fusion of nature and nurture at the hands of their pred¬ 
ecessors. 

Every one who does not consider, indeed every one who does not 
emphasize the fact that the human nature of each generation of men is 
determined chiefly by its nurture at the hands of the preceding 
generation misses the most potent single factor in social psychology. 
“Man is born,” says Mr. Wallas, “with a set of dispositions related, 
clumsily enough but still intelligibly, to the world of tropical or 
sub-tropical wood and cave which he inhabited during millions of 
years of slow evolution, and whose main characteristics changed 
little over vast periods of time.” If that were the full story of the 
human nature with which we become citizens of the Great Society, 
our plight would be bad indeed. But it is not the full story. Perhaps 
we have no original capacities which the cave man had not; but before 
we start in school, still more before we begin to earn our livings and 
to vote, our numberless unlearned capacities have grown into certain 
more or less stereotyped combinations utterly different from the 
combinations of the cave man. It still remains true that “neither 

1 Adapted with permission from W. C. Mitchell, “Human Behavior and 
Economics,” Quarterly Journal of Economics (November, 1914), pp. 14-16. 


THEORIES OF HUMAN NATURE 


65 


our instinctive nor our intelligent dispositions (even as thus made over) 
find it easy to discover their most useful stimuli” in the Great Society. 
But happily the disharmony is not that between the original instincts 
of cave men and the requirements of civilization. It is the dis¬ 
harmony between the requirements of the Great Society and a human 
nature composed of cave man elements combined with one another 
in definite forms derived from generations of farmers, handicraftsmen, 
and petty shopkeepers. 

b) CHANGING HUMAN NATURE 1 

After ignoring impulses for a long time in behalf of sensations, 
modern psychology now tends to start out with an inventory of 
instinctive activities. This is an improvement. But when it tries to 
explain complicated events in personal and social life by direct reference 
to these native powers, the explanation becomes hazy and forced. 

At some place on the globe, at some time, every kind of practice 
seems to have been tolerated or even praised. 2 How is the tremendous 
diversity of institutions (including moral codes) to be accounted for ? 
The native stock of instincts is practically the same everywhere. 
Exaggerate as much as we like the native differences of Patagonians 
and Greeks, Sioux Indians and Hindoos, Bushmen and Chinese, 
their original differences will bear no comparison to the amount of 
difference found in custom and culture. Since such a diversity cannot 
be attributed to an original identity, the development of native 
impulse must be stated in terms of acquired habits, not the growth 
of customs in terms of instincts. The same original fears, angers, 
loves and hates are hopelessly entangled in the most opposite institu¬ 
tions. The thing we need to know is how a native stock has been 
modified by interaction with different environments. 

In spite of what has been said, it will be asserted that there are 
definite, independent, original instincts which manifest themselves in 
specific acts in a one-to-one correspondence. Fear, it will be said, 
is a reality, and so is anger, and rivalry, and love of mastery of others, 
and self-abasement, maternal love, sexual desire, gregariousness and 
envy, and each has its own appropriate deed as a result. Of course 
they are realities. So are suction, rusting of metals, thunder and 
lightning and lighter-than-air flying machines. But science and 
invention did not get on as long as men indulged in the notion of special 

1 Adapted with permission from John Dewey, Human Nature and Conduct , 
pp. 90-91, 106-10, 166. (Henry Holt & Co., 1922.) 

2 Note by way of illustration the selections in chapter iv.—E d. 


66 


THE WORKER IN MODERN ECONOMIC SOCIETY 


forces to account for such phenomena. Men tried that road, and it 
only led them into learned ignorance. They spoke of nature’s 
abhorrence of a vacuum; of a force of combustion; of intrinsic nisus 
toward this and that; of heaviness and levity as forces. It turned 
out that these “forces” were only the phenomena over again, trans¬ 
lated from a specific and concrete form (in which they were at least 
actual) into a generalized form in which they were verbal. They 
converted a problem into a solution which afforded a simulated 
satisfaction. 

Advance in insight and control came only when the mind turned 
squarely around. After it had dawned upon inquirers that their 
alleged causal forces were only names which condensed into a duplicate 
form a variety of complex occurrences, they set about breaking up 
phenomena into minute detail and searching for correlations, that is, 
for elements in other gross phenomena which also varied. Corre¬ 
spondence of variations of elements took the place of large and imposing 
forces. The psychology of behavior is only beginning to undergo 
similar treatment. But as yet we tend to regard sex, hunger, fear, 
and even much more complex active interests as if they were lump 
forces, like the combustion or gravity of old-fashioned physical 
science. 

The notion that anger still remains a single force is a lazy mythol¬ 
ogy. Even in the cases of hunger and sex, where the channels of 
action are fairly demarcated by antecedent conditions (or “nature”), 
the actual content and feel of hunger and sex, are indefinitely varied 
according to their social contexts. Only when a man is starving, is 
hunger an unqualified natural impulse; as it approaches this limit, 
it tends to lose, moreover, its psychological distinctiveness and to 
become a raven of the entire organism. 

Again it is customary to suppose that there is a single instinct of 
fear, or at most a few well-defined sub-species of it. In reality, when 
one is afraid the whole being reacts, and this entire responding organ¬ 
ism is never twice the same. In fact, also, every reaction takes place 
in a different environment, and its meaning is never twice alike, 
since the difference in environment makes a difference in consequences. 
It is only mythology which sets up a single identical psychic force 
which “causes” all the reactions of fear, a force beginning and ending 
in itself. 

Fear of the dark is different from fear of publicity, fear of the 
dentist from fear of ghosts, fear of conspicuous success from fear of 


THEORIES OF HUMAN NATURE 


67 


humiliation, fear of a bat from fear of a bear. Cowardice, embarrass¬ 
ment, caution and reverence may all be regarded as forms of fear. 
There is no error in calling it fear. But there is error, even from a 
limited clinical standpoint, in permitting the classifying name to blot 
from view the difference between fear of bombs dropped from the 
sky and the fears which previously existed. The new fear is just as 
much and just as little original and native as a child’s fear of a stranger. 

For any activity is original when it first occurs. As conditions 
are continually changing, new and primitive activities are continually 
occurring. The traditional psychology of instincts obscures recogni¬ 
tion of this fact. When we recognize the diversity of native activities 
and the varied ways in which they are modified through interactions 
with one another in response to different conditions, we are able to 
understand moral phenomena otherwise baffling. 


Wary, experienced men of the world have always been sceptical 
of schemes of unlimited improvement. They tend to regard plans 
for social change with an eye of suspicion. They find in them evi¬ 
dences of the proneness of youth to illusion, or of incapacity on the 
part of those who have grown old to learn anything from experience. 
This type of conservative has thought to find in the doctrine of native 
instincts a scientific support for asserting the practical unalterability 
of human nature. Circumstances may change, but human nature 
remains from age to age the same. Heredity is more potent than 
environment, and human heredity is untouched by human intent. 
Effort for a serious alteration of human institutions is utopian. As 
things have been so they will be. The more they change the more 
they remain the same. 

Curiously enough both parties [conservative and radical] rest their 
case upon just the factor which when it is analyzed weakens their 
respective conclusions. That is to say, the radical reformer rests his 
contention in behalf of easy and rapid change upon the psychology 
of habits, of institutions in shaping raw nature, and the conservative 
grounds his counter-assertion upon the psychology of instincts. As 
matter of fact, it is precisely custom which has greatest inertia, which 
is least susceptible of alteration; while instincts are most readily 
modifiable through use, most subject to educative direction. The 
conservative who begs scientific support from the psychology of 
instincts is the victim of an outgrown psychology which derived its 
notion of instinct from an exaggeration of. the fixity and certainty of 



68 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the operation of instincts among the lower animals. He is a victim 
of a popular zoology of the bird, bee, and beaver, which was largely 
framed to the greater glory of God. He is ignorant that instincts in 
the animals are less infallible and definite than is supposed, and also 
that the human being differs from the lower animals in precisely 
the fact that his native activities lack the complex ready-made 
organization of the animals’ original abilities. 

But the short-cut revolutionist fails to realize the full force of the 
things about which he talks most, namely institutions as embodied 
habits. Any one with knowledge of the stability and force of habit 
will hesitate to propose or prophesy rapid and sweeping social changes. 
A social revolution may effect abrupt and deep alterations in external 
customs, in legal and political institutions. But the habits that are 
behind these institutions and that have, willy-nilly, been shaped by 
objective conditions, the habits of thought and feeling, are not so 
easily modified. They persist and insensibly assimilate to themselves 
the outer innovations—much as American judges nullify the intended 
changes of statute law by interpreting legislation in the light of 
common law. The force of lag in human life is enormous. 

Those who argue that social and moral reform is impossible on 
the ground that the Old Adam of human nature remains forever the 
same, attribute however to native activities the permanence and 
inertia that in truth belong only to acquired customs. To Aristotle 
slavery was rooted in aboriginal human nature. Native distinctions 
of quality exist such that some persons are by nature gifted with 
power to plan, command and supervise, and others possess merely 
capacity to obey and execute. Hence slavery is natural and inevitable. 
There is error in supposing that because domestic and chattel slavery 
has been legally abolished, therefore slavery as conceived by Aristotle 
has disappeared. But matters have at least progressed to a point 
where it is clear that slavery is a social state, not a psychological 
necessity. Nevertheless the worldly wise Aristotles of today assert 
that the institution of war and the present wage-system are so 
grounded in immutable human nature that effort to change them is 
foolish. 

Yet to view institutions as enemies of freedom, and all conven¬ 
tions as slaveries, is to deny the only means by which positive freedom 
in action can be secured. A general liberation of impulses may set 
things going when they have been stagnant, but if the released forces 
are on their way to anything they do not know the way nor where 


THEORIES OF HUMAN NATURE 


69 


they are going. Indeed, they are bound to be mutually contradictory 
and hence destructive—destructive not only of the habits they wish to 
destroy but of themselves, of their own efficacy. Convention and 
custom are necessary to carrying forward impulse to any happy 
conclusion. A romantic return to nature and a freedom sought 
within the individual without regard to the existing environment 
finds its terminus in chaos. Every belief to the contrary combines 
pessimism regarding the actual with an even more optimistic faith 
in some natural harmony or other—a faith which is a survival of some 
of the traditional metaphysics and theologies which professedly are 
to be swept away. Not convention but stupid and rigid convention 
is the foe. And, as we have noted, a convention can be reorganized 
and made mobile only by using some other custom for giving leverage 
to an impulse. 


PROBLEMS 

1. What was Adam Smith’s theory of human nature ? What is the theory 
implicit in the Declaration of Independence? What are the theories 
of the business men of your acquaintance ? Where did they get them ? 

2. Pick out several books and public documents which have been influential 
or significant, either in the past or the present: try to make out what 
assumptions about human character each makes and to see what influence 
these assumptions have upon the author’s conclusions and on the prac¬ 
tical effects of the book or document in question. 

3. “Improved knowledge about man is of more consequence for planning 
for the future than for immediate day to day action.” Can you see 
anything in this point ? 

4. What are the essential differences in point of view among the three 
selections in this chapter ? 

5. “Man’s behavior traces back ultimately to the stimuli of fundamental 
simple instincts with which he was born and which cannot be eradi¬ 
cated.” “This instinct idea is all wrong. Practically speaking, the 
only equipment with which men are born is a capacity to react to 
stimuli.” With which do you agree ? 

6. “There is, after all, little practical difference between the ‘instinct’ 
school and its opponents, since many adherents of the former concede 
that instincts are capable of almost unlimited modification and direction 
into selected channels of action.” Do you agree? 

7. “Modern social and industrial troubles are due to the conflict between 
fixed human nature and a changing world.” “They are due to the 
conflict between dynamic human nature and a static world.” Which? 
Is either true ? 


70 


THE WORKER IN MODERN ECONOMIC SOCIETY 


8. Is liberty “wish-fulfillment” ? If not, what is it ? What is individual¬ 
ism ? 

9. “Men in modem society belong to many different groups, each one 
representing a different interest or interests. Sometimes these interests 
conflict.” If they do, what decides which loyalty will be the stronger? 
How judge rationally the merits of conflicting “loyalties” ? 

10. Can we have organized society or organized industry without discipline ? 
If not, how avoid “thwarting” instincts? Has there ever been a 
society in which instincts have not been “thwarted”? Does the 
“moral equivalent” theory help here? 

11. Assuming it is true that because of our mental habits we judge the present 
too much by the past, have we any other standards of judgment ? 

12. A Labor Party candidate in a recent British election was quoted as 
saying that one of the aims of the Labor Party was to do away with 
“servility” in the modern world. Is this possible ? Is “servility” inborn 
or merely an acquired habit ? 

13. Does the material of this chapter throw any light on the reasons for 
churches, manufacturers’ associations, trade unions, shop committees, 
political parties, clubs, fraternities, secret orders, other institutions of 
modem life ? 

14. Does it afford any basis for judging the usefulness of such institutions ? 

15. Assume that man’s original equipment, like clay, is so mobile as to be 
capable of modification and adaptation by environment in almost any 
direction. What attitude should be assumed toward machine indus¬ 
try ? What kind of an educational scheme, both social and industrial, 
should we work for ? 

16. Some revolutionists are said to believe that if they could gain control 
of the whole institutional machinery of the community for a generation 
—including newspapers, schools, factories, commercial houses, banks, 
churches, and all the rest—they could remake the world to their hearts ’ 
desire. What would you think of their chances ? 

REFERENCES FOR FURTHER READING 

Cooley, C. H., Human Nature and the Social Order 

Crawford, O. G. S., Man and His Past 

Dewey, John, Human Nature and Conduct 

Edman, Irwin, Human Traits and Their Social Significance 

Goldenweiser, A. A., Early Civilization 

Hart, Bernard, The Psychology of Insanity 

Lippmann, Walter, A Preface to Politics 

-, Public Opinion 

McDougall, Wm., Social Psychology 
Robinson, J. H., The Mind in the Making 



THEORIES OF HUMAN NATURE 


71 


Tansley, A. G., The New Psychology 
Thorndike, E. L., The Original Nature of Man 
Trotter, W., Instincts of the Herd in Peace and in War 
Veblen, Thorstein, The Instinct of Workmanship 
Wallas, Graham, The Great Society 

-, Human Nature in Politics 

-, Our Social Heritage 

Watts, Frank, An Introduction to the Psychological Problems of Industry 


X 










' 






































■ 




■ 

i ■ i i 






PART TWO 


THE DEVELOPMENT OF ECONOMIC 
ORGANIZATION 


. 


























■ 













































. 

. 








o 






INTRODUCTION 


The central thought in the previous section was that man’s 
economic and social behavior is conditioned and largely determined 
by the character, past and present, of the economic organization in 
which he has been reared. Manifestly, then, the next step in a study 
of the “worker in modern economic society” should be an examination 
of the way in which the modern world does gain its livelihood, from 
the point of view especially of the part the wage-earner plays in the 
process and the position he occupies in the economic scheme. 

The present part begins such an examination by taking a pre¬ 
liminary glance at modern economic organization as a whole from 
two aspects: first, in contrast with other types of organization which 
men have used in other times and places; second, in the light of the 
simpler scheme out of which modern industrial America has grown. 
Later parts will be concerned with a more detailed analysis of 
certain special economic relationships of peculiar importance to the 
American wage-earner, and with types of action which wage-earners 
and other groups in the community are working out to meet the 
changing needs of the situation as it develops. 

The purposes of the present material may be represented as four¬ 
fold: to see something of the development of the form of economic 
organization in which the habits and modes of acting of people in the 
modern Western World have been formed; to see in broad outline 
how, and as far as possible why, economic organization has changed 
in the past; to see that it is changing and will continue to change in 
the future; to see something of the part the worker plays in this 
constant process of change, how he influences it and how he is affected 
by it. 

The part is divided into three chapters: chapter iv, described 
below; chapter v, which gives rapid glimpses of some of the more 
important changes which marked the growth of modern business 
from the relatively static life of the Middle Ages, particularly in 
England, and chapter vi, which carries these changes over into 
modern America and suggests the peculiarly American factors which 
have helped shape their course in this country. 


75 


CHAPTER IV 


GLIMPSES OF SOME DIVERSE TYPES OF 
‘ ‘ WORK-OR GANIZ ATION ’ ’ 

The selections which follow are simply snapshots of various 
schemes of economic organization which men have employed in widely 
differing times and circumstances. There is no chronological sequence 
in the arrangement, although the final selections—those concerned 
with the craft organization of medieval England—may be regarded 
in a qualified sense as a chronological introduction to the'material 
of chapter v. 

The purpose of the material present is purely one of compari¬ 
son and contrast—to indicate the wide diversity in principle and 
method which has characterized human organization in various times 
and places. It should immediately suggest that there is hardly such 
a thing as a “right” scheme of industrial organization—right for all 
times, places, and races—and, more important, that there are many 
sources of human power and energy and many forms of appeal to 
human motives of which our own economic organization takes little 
account and makes little use. 

Among the questions which might be borne in mind in reading the 
material are the following: (a) Where is the main responsibility vested 
for securing proper functioning of the producing organization, e.g., 
in the producers or workers, in the consumers, in the owners, in 
“custom,” in “competition,” in the state, in the church, in a special 
directing authority ? ( b ) If, as is usually the case, responsibility and 

control are not concentrated wholly in any one institution or group 
of persons, try to trace down the responsibility for special functions, 
e.g., where does responsibility for quality of output rest, and how is 
it secured? (c) What are the dominant motives appealed to for 
securing “good” work, e.g., fear, gain, craftsmanship? (d) Is there 
an ultimate “authority”—religious, moral, political, etc.—which 
determines the standards that govern activity ? (e) To what extent 

are the form and methods employed conditioned by the time and 
place and state of industrial knowledge of the economic society 
under consideration—for example, the principles underlying gild 
organization by handicraft technique—to what extent would the 

76 



SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 


77 


principles involved be available in a different economic environment, 
such as our own ? (/) If the form of organization under consideration 

has not survived, why not ? (g) What light do these selections throw 

on the relative influence on social organization of habit and tradition 
as against inborn characteristics ? 

Try in each particular to contrast the case under consideration 
with our own modern scheme of organization. Try to develop addi¬ 
tional points of comparison and contrast—the list given is by no means 
exhaustive. 


i. THE GREEK ARTISAN 1 

The .Greeks never recognized any distinction between a craft or 
“trade” and a “profession.” For these modern distinctions, if once 
we stop to consider them, are unreal and meaningless. The real 
distinction in this sphere, as our forefathers knew, is between the man 
within the gild or brotherhood who possesses certain definite knowl¬ 
edge, with the trained capacity to use it, and the man who possesses 
none, or, to put it boldly, between the artist and the common labourer. 
In those earlier days all men who knew the joy of creation, whether 
with hand or brain, ranked as “poets” or “artificers” and were 
accepted as fellow craftsmen. 

The stone-masons and sculptors who made and adorned the 
temples and sanctuaries, the colonnades and armouries, and other 
public buildings of Greece, were not State servants. They were 
private craftsmen, such as Socrates, whose time was in their own 
hands. On ordinary days, when the State did not call for their 
services, they worked in their own stoneyards, with four or five young 
apprentices, cutting those formal inscriptions and carving those quiet 
gravestone scenes that we know so well from our museums. But 
when there was a public building to claim their craftsmanship, they 
accepted State employment for the time being, working under an 
arrangement with the State Overseers or Special Commissioners of 
Public Works. Sometimes the master-mason became simply a fore¬ 
man, and his workmen were paid direct by the State, although he 
still retained control over them at their work. More often he remained 
a small contractor, undertaking the work himself and accepting all 
responsibility for its performance. 

1 Adapted with permission from Alfred Zimmern, The Greek Commonwealth , 
pp. 256-76. (Oxford University Press, 1915.) 


78 


THE WORKER IN MODERN ECONOMIC SOCIETY 


We can see plainly what kind of men these ancient contractors 
were, and how different from the modern organizer of hired labour 
who is called by the same name. The Greek contractor is simply a 
master-mason, working together on the same job with a number, 
perhaps scores, of other master-masons, proud to be able for a time 
to make the Acropolis their stoneyard, and to leave the mark of their 
craftsmanship, and that of the craftsmen whom they have trained, 
upon a great city monument. There is no competition here to keep 
the rival builder out of the job, and no rivalry for big winnings. 
Neither in Athens nor elsewhere do we find any traces of unemployed 
skilled labourers. The danger was all the other way: that cities would 
lack the labour necessary to carry out their designs. The rough 
labour they could raise at a pinch with women, children, and house¬ 
hold slaves; but these skilled employments, with their inherited craft- 
methods, they could not so easily improvise. 

This should serve to prepare our minds for what will be for modern 
readers the most remarkable feature of the Athenian building inscrip¬ 
tions, because we have been taught by our economists to regard it as 
impossible—the appearance in them of slave-masons doing the same 
work and receiving the same pay as the freemasons. 

These slaves and other non-citizens (no doubt many of them 
freedmen) are working not only at the same trade but at identically 
the same tasks as the citizen workmen. All of them, including the 
foreman master, are paid at the same rate—one drachma a day, or 
about four shillings’ purchasing power. Indeed, as Francotte remarks: 
“The ordinary wage for all categories of workers on the Erechtheum 
from the architect to the day labourer, for free men as for slaves, is a 
drachma a day.” 

Because economic life was stable, craftsmen could feel themselves 
to be comrades, and because they were comrades they could help to 
keep life stable. Every part and craft had its own Association, not a 
Trades Union or Employers’ Association such as we know them, but 
a union of men who understand one another and were drawn close 
together by the same daily effort and the practice of the same art. 
The Greek band of associates was a social and religious, not an eco¬ 
nomic, form of grouping. Its members did not need to “protect their 
own interest,” for these were sufficiently protected by custom and 
the constitution of society; when they felt anxious about them they 
could go as citizens to the assembly. They did not need to raise 
prices, for they were working not for riches but for honour and a 


SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 


79 


livelihood, and prices were fixed by immemorial custom. In their 
little professional conclaves they merely did honour to their god or 
hero or founder, the metal-workers to Hephaestus, the doctors to 
Asclepius, the epic poets and reciters to Homer, and then “talked 
shop” about the mysteries into which they had been initiated. For 
the craft-secrets that they discussed were really mysteries. The 
outer world, and, above all, the State, had no concern with them. 
There was no State regulation of skilled industry, for there were no 
industrial abuses—not, at least, in the sphere with which we are here 
concerned. Nor were there State-granted patents. Knowledge was 
either free for all men or religiously confined to the craft and handed 
down and added to from generation to generation. 

So, as Solon has already suggested to us, craftsmanship in Greece 
covered a far wider sphere than that which we are accustomed to 
associate with “industry” today. Everybody who had some special 
skill or art by which he earned his living, whether by “rendering 
service” or “producing commodities,” was accounted a craftsman, 
from the poet who “built the lofty rhyme” and the doctor who could 
mix herbs or perform operations down to the tanner and the cobbler. 
City State life was, in fact, democratic; and we ought not to be 
surprised, though in fact we are, when we find doctors and sculptors 
and schoolmasters being paid, like masons and joiners and private 
soldiers, at the customary standard rate. They all earned a decent 
livelihood, which was all that they asked for in pay. They preferred 
to take the “rise” that the modern craftsman would demand, in 
honour and public estimation, or, if the city felt particularly grateful, 
in a golden crown and a public banquet. Indeed, it was very seldom 
that they worked for wages at all, because, as the London clerk said 
of his summer holiday, it interfered so much with their daily habits. 
They worked as wage-earners for the city when the need arose: for 
they were her citizens and trained to do her bidding. But who were 
they, as free men, that they should work for wages from their equals ? 
“Such an arrangement would have put the craftsman almost in the 
position of the slave. His aim in life was very different: to preserve 
his full personal liberty and freedom of action, to work when he felt 
inclined and when his duties as a citizen permitted him, to harmonize 
his work with all the other occupations which filled the life of a Greek, 
to participate in the government, to take his seat in the courts, to 
join in the games and festivals, to break off his work when his friends 
called him out to go to the market-place or the wrestling school, or 


8o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


when his colleagues in the craft were holding a dinner—all of them 
things which were incompatible with a contract at a fixed wage.” 

2. THE SIBERIAN CONVICT 1 

Hard labor in our fortress was not an occupation, but an obliga¬ 
tion. The prisoners accomplished their task, they worked the number 
of hours fixed by the law, and then returned to the prison. They 
hated their work outside. If the convict had not some private work 
of his own, it would have been impossible for him to support his 
confinement. How could these persons, all strongly constituted, who 
had been brought together against their will, after society had cast 
them off—how could they live in a normal and natural manner ? Man 
cannot exist without work, without legal, natural property. Depart 
from these conditions, and he becomes a wild beast. Accordingly, 
every convict, through natural requirements and by the instinct of 
self-preservation, had a trade—an occupation of some kind. 

Consequently each barrack, though locked and bolted, assumed 
the appearance of a large workshop. The work was not, it is true, 
strictly forbidden, but it was forbidden to have tools, without which 
work is evidently impossible. But we laboured in secret, and the 
administration seemed to shut its eyes. Many prisoners arrived with¬ 
out knowing how to make use of their fingers, but they learnt a trade 
from some of their companions. We had among us cobblers, tailors, 
masons, locksmiths, and gilders. 

I did not understand till long afterwards why the prison labour was 
really hard and excessive. It was less by reason of its difficulty, than 
because it was forced, imposed, obligatory; done through fear of 
the stick. The peasant works certainly harder than the convict, for, 
during the summer, he works night and day. But it is in his own 
interest. He has a rational aim, so that he suffers less than the 
convict who performs hard labour from which he derives no profit. 
It once came into my head that if it were desired to reduce a man to 
nothing—to punish him atrociously, to crush him in such a manner 
that the most hardened murderer would tremble before such a punish¬ 
ment—it would be necessary only to give to his work a character of 
complete uselessness. 

Hard labour, as it is now carried on, presents no interest to the 
convict; but it has its utility. The convict makes bricks, digs the 

1 Adapted with permission from Fyodor Dostoievsky, The House of the Dead , 
pp. 18-19, 25, 99, 103-7. (Everyman Edition, E. P. Dutton & Co., 1911.) 



SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 


81 


earth, builds: and all his occupations have a meaning and an end. 
Sometimes, even the prisoner takes an interest in what he is doing. 
He then wishes to work more skilfully, more advantageously. But 
let him be constrained to pour water from one vessel into another, or 
to carry earth from one place to another and back again, then I am 
persuaded that at the end of a few days the prisoner would strangle 
himself or commit a thousand crimes, punishable with death, rather 
than live in such an abject condition and endure such torments. 


Behind the fortress on the frozen river were two barges belonging 
to the Government, which were not worth anything, but which had 
to be taken to pieces in order that the wood might not be lost. The 
wood was in itself all but valueless. This work was given us to keep 
us busy. This was understood on both sides. 

At last we reached the bank; a little lower down was the old 
hulk, which we were to break up, stuck fast in the ice. I expected to 
see everyone go to work at once. Nothing of the kind. Some of the 
convicts sat down negligently on wooden beams that were lying near 
the shore, and nearly all took from their pockets pouches containing 
native tobacco—which was sold in leaf at the market at the rate of 
three kopecks a pound—and short wooden pipes. They lighted them 
while the soldiers formed a circle around them, and began to watch 
us with a tired look. 

“Who the devil had the idea of sinking this barge?” asked one 
of the convicts in a loud voice, without speaking to anyone in 
particular. 

At last the non-commissioned officer appointed to superintend the 
work came up with a cane in his hand. 

“What are you sitting down for? Begin at once.” 

“Give us our tasks, Ivan Matveitch,” said one of the “foremen” 
among us, as he slowly got up. 

“What more do you want? Take the barge to pieces, that is 
vour task.” 

j 

Ultimately the convicts got up and went to the river, but very 
slowly. Different “directors” appeared, “directors,” at least, in 
words. The barge was not to be broken up anyhow. The latitudinal 
beams were to be preserved, and this was not an easy thing to 
manage. 

“Draw this beam out, that is the first thing to do,” cried a convict 
who was neither a director nor a foreman, but a simple workman. 



82 


THE WORKER IN MODERN ECONOMIC SOCIETY 


This man, very quiet and a little stupid, had not previously spoken. 
He now bent down, took hold of a heavy beam with both hands, and 
waited for someone to help him. No one, however, seemed inclined 
to do so. 

“Not you, indeed, you will never manage it; not even your grand¬ 
father, the bear, could do it,” muttered someone between his teeth. 

“Well, my friend, are we to begin? As for me, I can do nothing 
alone,” said the man who had put himself forward, and who now, 
quitting the beam, stood upright. 

“Unless you are going to do all the work by yourself, what are 
you in such a hurry about?” 

“He couldn’t feed three hens without making a mistake, and now 
he puts himself forward!” 

“I was only speaking,” said the poor fellow, excusing himself for 
his forwardness. 

Finally the prisoners began work, but with no good-will, and very 
indolently. The irritation of the under-officer at seeing these vigorous 
men remain so idle was intelligible enough. While the first beam was 
being removed it suddenly snapped. 

“It broke in pieces,” said the convict in self-justification. It was 
impossible then, they suggested, to work in such a manner. What was 
to be done ? A long discussion took place between the prisoners, and 
little by little they came to insults; nor did this seem likely to be the 
end of it. The under-officer shouted again and shook his stick, but 
the second beam snapped like the first. 

After an hour the “ foreman ” arrived. He listened quietly to what 
the convicts had to say, declared that the task he gave them was to 
get out four beams unbroken, and to demolish a good part of the 
barge. As soon as this was done the prisoners could go back to the 
house. The task was a considerable one, but good heavens! how the 
convicts now went to work! Where now was their idleness, their 
want of skill ? The hatchets soon began to dance, and soon the beams 
were sprung. Those who had no hatchets made use of thick sticks 
to push beneath the beams, and thus in due time and in skilful fashion 
they got them out. The convicts seemed suddenly to have become 
intelligent. No more insults were heard. Every one knew perfectly 
what to say, to do, to advise. Just half-an-hour before the beating 
of the drum, the appointed task was executed, and the prisoners 
returned to the convict prison fatigued, but pleased to have gained 
half-an-hour from the working time fixed by the regulations. 


SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 


83 


3. AMERICAN SLAVE ECONOMY 1 

The economic advantages of slavery are easily stated: they are 
all comprised in the fact that the employer of slaves has absolute 
power over his workmen, and enjoys the disposal of the whole fruit of 
their labours. Slave labour, therefore, admits of the most complete 
organization, that is to say, it may be combined on an extensive scale, 
and directed by a controlling mind to a single end, and its cost can 
never rise above that which is necessary to maintain the slave in 
health and strength. 

On the other hand, the economical defects of slave labour are very 
serious. They may be summed up under the three following heads: 
it is given reluctantly; it is unskillful; it is wanting in versatility. 

It is given reluctantly, and consequently the industry of the slave 
can only be depended on so long as he is watched. The moment the 
master’s eye is withdrawn, the slave relaxes his efforts. The cost of 
slave labour will therefore, in great measure, depend on the degree 
in which the work to be performed admits of the workmen being 
employed in close proximity to each other. If the work be such that 
a large gang can be employed with efficiency within a small space, 
and be thus brought under the eye of a single overseer, the expense of 
superintendence will be slight; if, on the other hand, the nature of 
the work* requires that the workmen should be dispersed over an 
extended area, the number of overseers, and, therefore, the cost of the 
labour which requires this supervision, will be proportionately 
increased. The cost of slave labour thus varies directly with the 
degree in which the work to be done requires dispersion of the labourers, 
and inversely as it admits of their concentration. Further, the work 
being performed reluctantly, fear is substituted for hope, as the 
stimulus to exertion. But fear is ill calculated to draw from a 
labourer all the industry of which he is capable. 

Secondly, slave labour is unskillful, and this, not only because the 
slave, having no interest in his work, has no inducement to exert his 
higher faculties, but because, from the ignorance to which he is of 
necessity condemned, he is incapable of doing so. In the Slave States 
of North America, the education of slaves, even in the most rudi¬ 
mentary form, is proscribed by law, and consequently their intelligence 
is kept uniformly and constantly at the very lowest point. “ You can 
make a nigger work,” said an interlocutor in one of Mr. Olmsted’s 

1 Adapted with permission from John Elliot Cairnes, The Slave Power , 
pp. 42-52. (New York: Castelon, 1862.) 


8 4 


THE WORKER IN MODERN ECONOMIC SOCIETY 


dialogues, “but you cannot make him think.” He is therefore 
unsuited for all branches of industry which require the slightest care, 
forethought, or dexterity. He cannot be made to co-operate with 
machinery; he can only be trusted with the coarsest implements; he 
is incapable of all but the rudest forms of labour. 

But further, slave labour is eminently defective in point of ver¬ 
satility. The difficulty of teaching the slave anything is so great, 
that the only chance of turning his labour to profit is, when he has 
once learned a lesson, to keep him to that lesson for life. Where 
slaves, therefore, are employed there can be no variety of production. 
If tobacco be cultivated, tobacco becomes the sole staple, and tobacco 
is produced, whatever be the state of the market, and whatever be 
the condition of the soil. 

Such being the character of slave-labour, as an industrial instru¬ 
ment, let us now consider the qualities of the agency with which, in 
the colonization of North America, it was brought into competition. 
This was the labour of peasant proprietors, a productive instrument, 
in its merits and defects, the exact reverse of that with which it was 
called upon to compete. Thus, the great and almost the sole excel¬ 
lence of slave labour is, as we have seen, its capacity for organization; 
and this is precisely the circumstance with repect to which the labour 
of peasant proprietors is especially defective. In a community of 
peasant proprietors, each workman labours on his own account, with¬ 
out much reference to what his fellow-workmen are doing. There 
is no commanding mind to whose guidance the whole labour force will 
yield obedience, and under whose control it may be directed by skill¬ 
ful combinations to the result which is desired. Nor does this system 
afford room for classification and economical distribution of a labour 
force in the same degree as the system of slavery. Under the latter, 
for example, occupation may be found for a whole family of slaves, 
according to the capacity of each member, in performing the different 
operations connected with certain branches of industry. Thus, in the 
culture of tobacco, the women and children may be employed in pick¬ 
ing the worms off the plants, or gathering the leaves as they become 
ripe while the men are engaged in the more laborious tasks. But it is 
otherwise when the cultivator is a small proprietor. His children are 
at school, and his wife finds enough to occupy her in her domestic 
duties: he can, therefore, command for all operations, however 
important or however insignificant, no other labour than his own, or 
that of his grown-up sons—labour which would be greatly misapplied 


SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 85 

in performing such manual operations as I have described. The 
system of peasant proprietorship, therefore, does not admit of com¬ 
bination and classification of labour in the same degree as that of 
slavery. But if in this respect it lies under a disadvantage as com¬ 
pared with its rival, in every other respect it enjoys an immense 
superiority. The peasant proprietor, appropriating the whole pro¬ 
duce of his toil, needs no other stimulus to exertion. Superintendence 
is here completely dispensed with. The labourer is under the strongest 
conceivable inducement to put forth, in the furtherance of his task, 
the full powers of his mind and body; and his mind, instead of being 
purposely stinted and stupefied, is enlightened by education, and 
aroused by the prospect of reward. 

4. THE ECONOMIC SOCIETY OF THE INCAS 1 

The impositions on the Peruvian people seem to have been suffi¬ 
ciently heavy. On them rested the whole burden of maintaining, not 
only their own order, but every other order in the state. The whole 
duty of defraying the expenses of the government belonged to the 
people. The great hardship in the case of the Peruvian was, that he 
could not better his condition. His labours were for others rather 
than for himself. However industrious, he could not add a rood to 
his own possessions, nor advance himself one hair’s breadth in the 
social scale. No wonder that the government should have dealt with 
sloth as a crime. It was a crime against the state, and to be waste¬ 
ful of time was, in a manner, to rob the exchequer. The Peruvian, 
labouring all his life for others, might be compared to the convict in 
a treadmill, going the same dull round of incessant toil, with the 
consciousness, that, however profitable the results to the state, they 
were nothing to him. 

But this is the dark side of the picture. If no man could become 
rich in Peru, no man could become poor. No spendthrift could waste 
his substance in riotous luxury. No adventurous schemer could 
impoverish his family by the spirit of speculation. The law was 
constantly directed to enforce a steady industry and a sober manage¬ 
ment of his affairs. No mendicant was tolerated in Peru. When a 
man was reduced by poverty or misfortune (it could hardly be by 
fault), the arm of the law was stretched out to minister relief; not 
the stinted relief of private charity, not that which is doled out drop 

1 Adapted with permission from William H. Prescott, History of the Conquest of 
Peru , pp. 36-37, 50, 78-83, ioo-ioi. (Everyman Ed., E. P. Dutton & Co., 1909.) 


86 


THE WORKER IN MODERN ECONOMIC SOCIETY 


by drop, as it were, from the frozen reservoirs of “the parish,” but 
in generous measure, bringing no humiliation to the object of it, and 
placing him on a level with the rest of his countrymen. 

No man could be rich, no man could be poor, in Peru; but all might 
enjoy, and did enjoy, a competence. Ambition, avarice, the love of 
change, the morbid spirit of discontent, those passions which most 
agitate the minds of men, found no place in the bosom of the Peruvian. 
The very condition of his being seemed to be at war with change. 
He moved on in the same unbroken circle in which his fathers had 
moved before him, and in which his children were to follow. It was 
the object of the Incas to infuse into their subjects a spirit of passive 
obedience and tranquillity, a perfect acquiescence in the established 
order of things. In this they fully succeeded. The Spaniards who 
first visited the country are emphatic in their testimony, that no 
government could have been better suited to the genius of the people; 
and no people could have appeared more contented with their lot, 
or more devoted to their government. 

Those who may distrust the accounts of Peruvian industry, will 
find their doubts removed on a visit to the country. The traveller 
still meets, especially in the central regions of the table-land, with 
memorials of the past, remains of temples, palaces, fortresses, terraced 
mountains, great military roads, aqueducts, and other public works, 
which, whatever degree of science they may display in their execution, 
astonish him by their number, the massive character of the materials, 
and the grandeur of the design. 

The Peruvian institutions, though they may have been modified 
and matured under successive sovereigns, all bear the stamp of the 
same original—were all cast in the same mould. Each succeeding 
Inca seemed desirous only to tread in the path, and carry out the 
plans of his predecessor. Great enterprises, commenced under one, 
were continued by another, and completed by a third. Thus, while 
all acted on a regular plan, without any of the eccentric or retrograde 
movements which betray the agency of different individuals, the 
state seemed to be under the direction of a single hand, and steadily 
pursued, as if through one long reign, its great career of civilization 
and of conquest. The ultimate aim of its institutions was domestic 
quiet. 

Husbandry was pursued by them on principles that may be truly 
called scientific. It was the basis of their political institutions. Hav¬ 
ing no foreign commerce, it was agriculture that furnished them with 


SOME DIVERSE TYPES OF “ WORK-ORGANIZATION ” 


87 


the means of their internal exchanges, their substance, and their 
revenues. They distributed the land in equal shares among the 
people, while they required every man, except members of the priv¬ 
ileged orders, to assist in its cultivation. The Inca himself did not 
disdain to set the example. On one of the great annual festivals, he 
proceeded to the environs of Cuzco, attended by his court, and, in 
the presence of all the people, turned up the earth with a golden 
plough—or an instrument that served as such—thus consecrating the 
occupation of the husbandman as one worthy to be followed by the 
Children of the Sun. 

The patronage of the government did not stop with this cheap 
display of royal condescension, but was shown in the most efficient 
measures for facilitating the labours of the husbandman. Much of 
the country along the sea-coast suffered from want of water, as little 
or no rain fell there, and the few streams, in their short and hurried 
course from the mountains, exerted only a very limited influence on 
the wide extent of territory. The soil, it is true, was, for the most 
part, sandy and sterile; but many places were capable of being 
reclaimed, and, indeed, needed only to be properly irrigated to be 
susceptible of extraordinary production. To these spots water was 
conveyed by means of canals and subterraneous aqueducts, executed 
on a noble scale. 

The greatest care was taken that every occupant of the land 
through which these streams passed should enjoy the benefit of them. 
The quantity of water allotted to each was prescribed by law; and 
royal overseers superintended the distribution, and saw that it was 
faithfully applied to the irrigation of the ground. 

It was frequently the policy of the Incas, after providing a desert 
tract with the means for irrigation, and thus fitting it for the labours 
of the husbandman, to transplant there a colony of miiimaes, who 
brought it under cultivation by raising the crops best suited to the 
soil. While the peculiar character and capacity of the lands were 
thus consulted, a means of exchange of the different products was 
afforded to the neighbouring provinces, which, from the formation of 
the country, varied much more than usual within the same limits. To 
facilitate these agricultural exchanges, fairs were instituted, which 
took place three times a month in some of the most populous places, 
where, as money was unknown, a rude kind of commerce was kept up 
by the barter of their respective products. These fairs afforded so 
many holidays for the relaxation of the industrious labourer. 


88 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Such were the expedients adopted by the Incas for the improve¬ 
ment of their territory; and, although imperfect, they must be 
allowed to show an acquaintance with the principles of agricultural 
science that gives them some claim to the rank of a civilised people. 
Under their patient and discriminating culture, every inch of good 
soil was tasked to its greatest power of production, while the most 
unpromising spots were compelled to contribute something to the 
subsistence of the people. 

It added not a little to the efficacy of the government, that, below 
the sovereign, there was an order of hereditary nobles of the same 
divine origin with himself, who, placed far below himself, were still 
immeasurably above the rest of the community, not merely by descent, 
but, as it would seem, by their intellectual nature. Was it not, as 
we have said, the most oppressive, though the mildest of despotisms ? 

It was the mildest, from the very circumstance, that the tran- 
scendant rank of the sovereign, and the humble, nay, superstitious, 
devotion to his will, made it superfluous to assert this will by acts of 
violence or rigour. The great mass of the people may have appeared 
to his eyes as but little removed above the condition of the brute, 
formed to minister to his pleasures. But, from their very helplessness, 
he regarded them with feelings of commiseration, like those which a 
kind master might feel for the poor animals committed to his charge, 
or—to do justice to the beneficent character attributed to many of 
the Incas—that a parent might feel for his young and impotent 
offspring. The laws were carefully directed to their preservation and 
personal comfort. The people were not allowed to be employed on 
works pernicious to their health, nor to pine under the imposition 
of tasks too heavy for their powers. They were never made the 
victims of public or private extortion; and a benevolent forecast 
watched carefully over their necessities, and provided for their relief 
in season of infirmity, and for their sustenance in health. The 
government of the Incas, however arbitrary in form, was in its spirit 
truly patriarchal. 

Yet in this there was nothing cheering to the dignity of human 
nature. What the people had was conceded as a boon, not as a 
right. When a nation was brought under the sceptre of the Incas, 
it resigned every personal right, even the rights dearest to humanity. 
Under this extraordinary polity, a people advanced in many of the 
social refinements, well skilled in manufactures and agriculture, were 
unacquainted, as we have seen, with money. They had nothing that 


SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 89 

deserved to be called property. They could follow no craft, could 
engage in no labour, no amusement, but such as was specially provided 
by law. They could not change their residence or their dress without 
a license from the government. They could not even exercise the 
freedom which is conceded to the most abject in other countries, 
that of selecting their own wives. The imperative spirit of despotism 
would not allow them to be happy or miserable in any way but that 
established by law. 

The astonishing mechanism of the Peruvian polity could have 
resulted only from the combined authority of opinion and positive 
power in the ruler to an extent unprecedented in the history of man. 
Yet that it should have so successfully gone into operation, and so 
long endured, in opposition to the tastes, the prejudices, and the very 
principles of our nature, is a strong proof of a generally wise and 
temperate administration of the government. 

The policy habitually pursued by the Incas for the prevention of 
evils that might have disturbed the order of things, is well exemplified 
in their provisions against poverty and idleness. In these they rightly 
discerned the two great causes of disaffection in a populous community. 
The industry of the people was secured not only by their compulsory 
occupations at home, but by their employment on those great public 
works which covered every part of the country, and which still bear 
testimony in their decay to their primitive grandeur. 

5. A GLIMPSE OF PRODUCTION IN THE ENGLISH 

HANDICRAFT PERIOD 

a) THE EMERGENCE OF “INDUSTRY” IN THE TWELFTH CENTURY 1 

The rise of the craft gilds in the twelfth and thirteenth centuries 
meant the appearance in Western Europe of industry as a separate 
economic phenomenon, as distinguished from agriculture on the one 
side and trade on the other. The economic activity of the early 
Middle Ages was an almost exclusively agricultural one. Then there 
slowly arose a merchant class; at first, it would seem, merely to meet 
the needs of the wealthy and more luxurious, and then to transport 
from place to place a local superfluity of such raw produce as corn or 
wool. But with the appearance of craft gilds we see, for the first time, 

1 Adapted with permission from W. J. Ashley, An Introduction to English 
Economic History and Theory , Part II, pp. 99, 7 1— 75 * (London, Longmans, 
Green & Co., 1893.) 


90 


THE WORKER IN MODERN ECONOMIC SOCIETY 


a body of men with whom manufacture was not a by-employment, 
but the main business of their lives. 

Nothing is more noticeable than the rapidity with which, in 
London, and other large towns, the gild organization was extended 
to every branch of industry and trade at the end of the fourteenth 
and the early part of the fifteenth century, and somewhat later in 
the less important towns. The primary purpose which the authorities 
and the craftsmen themselves had in view was to bring about such a 
supervision of wares as should secure the observance of generally 
accepted standards of good work. 

There were, however, many motives besides the desire for a survey 
of wares which stimulated the general movement toward gild frater¬ 
nities. The gild corresponded so closely to the social tendencies of the 
time—the disposition to seek for local or class franchises rather than 
general liberties, the love of pageantry and public display, the desire 
to secure the souks future by means of alms and masses—that it 
became the universal form of association. There was yet another 
motive for corporate action, which became more prominent as time 
went on. The early charters authorizing the existence of craft gilds 
had usually conferred upon their members an exclusive right to carry 
on their particular industry in their own town. 

b) THE CONTROL OF CRAFT INDUSTRY 1 

Although the control of industries by municipal by-laws may be 
classed as “external,” and control by gild regulations as “internal,” 
no hard-and-fast line can really be drawn between the two. In 
England the two authorities worked together with very little friction, 
the craft gilds recognizing the paramount position of the merchant 
gild or town council, and the latter, in turn, protecting the interest 
of the gilds and using their organization to control the various crafts. 
Although nothing could be farther from the truth than the senti¬ 
mental notion that the medieval workman always loved a piece of 
good work for its own sake and never scamped a job, to give them 
their due, the gilds recognized the importance to their own interests 
of maintaining a high standard of workmanship, and co-operated 
loyally with the municipal authorities to that end. 

The interests of the craftsmen, or producers, were as a whole 
opposed to those of the consumers. They co-operated, as suggested, 

1 Adapted with permission from L. F. Salzmann, English Industries of the 
Middle Ages , pp. 204-12. (Constable & Co., Ltd., 1913.) 


SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 


91 


with the local authorities in maintaining the standard of workmanship, 
because the craft that did not do so would soon find itself “defamed 
and out of employ,” but it was obviously to their interest to keep up 
prices by the limitation of competition and of output. Their success 
in restricting competition varied very greatly in different trades and 
places. As a whole, however, the gilds had the townsmen behind 
them in their opposition to outsiders. The traditional attitude of the 
Englishman towards a stranger has always been to “heave half a 
brick at him,” and as far back as 1421 the authorities at Coventry 
had to order “that no man throw ne cast at noo straunge man, ne 
skorn hym.” 

From the consumer’s point of view the regulation of prices was 
perhaps the most important problem, and this was very intimately 
related with the question of wages. The medieval economist seems 
to have accepted Ruskin’s theory that all men engaged in a particular 
branch of trade should be paid equal wages. There were, of course, 
grades in each profession, as master or foreman, workman, and 
assistant or common laborer, but within each grade the rate of pay¬ 
ment was fixed, at least within the jurisdiction of any gild or town 
authority, unless the work was quite exceptional. 

Wages were at all times paid on the two systems of piece-work 
and time, and the hours, which varied in different trades, and at 
different places and periods, were as a rule long. The blacksmiths 
of London worked, at the end of the fourteenth century, from dawn 
till 9 p.m., except during November, December, and January, when 
their hours were from 6 a.m. to 8 p.m. In the case of the Cappers’ 
gild at Coventry the journeymen’s hours were in 1496 from 6 a.m. 
to 6 p.m.; but in 1520 they had been increased, being from 6 a.m. to 
7 p.m. in winter, and from 5 a.m. to 7 p.m. in summer. Against the 
long hours we have to set the comparative frequency of holidays. 

c) AN APPRAISAL OF APPRENTICESHIP 1 

The object of apprenticeship is defined in an Elizabethan state 
document: “Until a man grow unto the age of twenty-three years” 
he has not “grown unto the full knowledge of the art that he pro¬ 
fessed.” It was a system of technical training, by which the crafts¬ 
man was initiated into the secrets of his craft and rendered qualified 
to carry on his calling. It was essentially a contractual relation 

1 Adapted with permission from E. Lipson, An Introduction to the Economic 
History of England , pp. 279-95. (A. & C. Black, Ltd., 1915.) 


92 


THE WORKER IN MODERN ECONOMIC SOCIETY 


involving mutual obligations on the part of master and apprentice 
alike. The master was required to provide bed and board and 
technical training, “and whatever is needful for an apprentice”; 
sometimes also a small salary; sometimes even his schooling and a 
knowledge of languages. In an indenture drawn up at Leicester in 
1531 the apprentice was to receive eightpence a year, and in the 
eighth year sixpence a week; moreover, he was “to be kept as a 
prentice should be, that is to say, meat and drink, hose and shoes, 
linen, woollen, and his craft to be taught him, and nothing hid from 
him thereof.” If the master neglected to fulfil these duties the 
apprentice was at liberty to withdraw from his service. 

It would be erroneous, however, to regard the institution of 
apprenticeship as simply a system of technical training, for above 
all it was a system of social training. It was intended to fashion 
not only good craftsmen, inspired with loyalty to their city, but good 
citizens willing to give active service on its behalf when summoned 
to the field or the council chamber. The bond between master and 
apprentice was of the closest description; the master stood in loco 
parentis to the apprentice, who lived in his house, sat at his board, 
and associated with him in the workshop and the home on terms of 
the most personal intimacy. Apprenticeship became an integral 
element in the constitution of the craft gild, because in no other way 
was it possible to ensure the permanency of practice and the con¬ 
tinuity of tradition, by which alone the reputation of the gild for 
honourable dealing and sound workmanship could be carried on 
from generation to generation: or to raise up, as one gild expressed 
it, “honest and virtuous masters to succeed us in this worshipful 
fellowship for the maintenance of the feats of merchandise.” 

Drawn from the same social status, united by a sense of common 
interests, masters and men in the early days of industrial development 
could toil side by side in willing co-operation, undivided by the 
antagonism of capital and labour. In so far as any difficulty dis¬ 
turbed the smooth working of the gild system, it arose rather from 
the lack than the superabundance of apprentices. Throughout the 
Middle Ages, England remained primarily an agricultural country, a 
land of tillers, to whose needs the interests of trader and artisan alike 
were frankly subordinated. But in the fifteenth century industry 
was beginning to prove more attractive than husbandry; it offered a 
wider scope to men of initiative and enterprise, and opened up a field 
of opportunity where wealth and prestige lay within the grasp of all 


SOME DIVERSE TYPES OF a WORK-ORGANIZATION” 


93 


who could approve themselves worthy by their skill and resources. 
The cloth trade was progressing by leaps and bounds, and the pros¬ 
perous burgher began to store up riches in his house and entertain 
kings at his table for his guests. There was a movement from the 
country to the towns in the years that followed the Black Death, and 
the discontent of the peasants with the burdens of villeinage spurred 
on their ambition for better things. The cry went up that tillage was 
decaying from scarcity of agricultural labourers, and the government 
responded with the acts of 1388 and 1406. The first act enjoined 
that all who served in husbandry till the age of twelve should con¬ 
tinue to do so, and not be apprenticed to any mystery. More impor¬ 
tant still was the second act, by which no one might place his child 
to serve as apprentice to any craft “or other labour within any city 
or borough, except he have land or rent to the value of twenty shillings 
by the year at the least.” Some writers have supposed that this 
statute was ineffectual, but this view is undoubtedly incorrect. In 
1429 the citizens of London petitioned against it, and they were 
excluded from its operation. Oxford made two futile attempts in 
1450 and 1455 to obtain immunity from the act; they complained 
that their town was “desolate for the more part,” since scholars had 
withdrawn from the University, “saying that they may not have 
artificers to serve them.” 

The system of apprenticeship can be traced as far back as 1260, 
and before the thirteenth century had come to a close it had become 
part and parcel of the economic life of the London craft gilds. We 
can readily grasp the reasons that account for its rapid spread through 
every industrial centre in England, where the craft gilds brought 
together in a compact body all who followed a common calling. It 
was a field of technical training, a school of specialized knowledge, in 
which the artisan learnt the mystery of his craft and was taught the 
ideals of good workmanship and sound quality, upon which the 
reputation of the gild depended. At the same time it protected the 
qualified workman from unskilled competitors, while later it developed 
in the hands of exclusive gilds into an instrument of monopoly. 
But although apprenticeship became a universal feature of industrial 
life in the later Middle Ages, it is erroneous to suppose that it was 
everywhere made obligatory upon those who wished to set up in the 
gild as journeymen or masters. 

Every journeyman looked forward to the day when he would 
cease to be a wage-earner and would take his place among the masters 


94 


THE WORKER IN MODERN ECONOMIC SOCIETY 


of the gild as a fully qualified craftsman, sharing in the common life 
of the town, bearing its burdens and participating in its privileges. 
Sometimes he was required to furnish a “ masterpiece,” though this 
was more common in the seventeenth century than in the fifteenth. 

d) CHURCH AUTHORITY AND THE “jUST PRICE ” 1 

[Note. —The standards which governed economic activity in the 
Middle Ages were in many respects very different from those now 
prevalent, and in their determination the religious thought of the time 
played a dominant part. Doubtless the ideals set up were in the 
main unrealized, but backed as they were by a religious authority 
which none dared question they were generally accepted as a test by 
which economic actions and relations could be judged. As the applica¬ 
tion of these standards in the light of custom and tradition gave them 
concrete meaning, the Middle Ages gained something like an absolute 
code of economic justice. It is hard—perhaps impossible—for the 
modem American to realize the unity and stability which this must 
have given the life of the time, or to appreciate the changes in the 
standards of economic life which have succeeded the break-up of 
the medieval church. While we have ethical standards in modern 
economic activity, as compared with medieval standards they change 
rapidly, they are often different for different economic classes, they 
have no authoritative (at least no supernatural) sanction binding on 
everyone; in a word, they have become relative.'— Ed.] 

To the mediaeval theologian an “eagerness for gain,” beyond that 
necessary to maintain a man of his rank in life, was in itself avarice, 
and therefore sin. But if the pursuit of wealth for its own sake was 
sinful, how were the ordinary activities of life to be justified? The 
answer to this question was given by another dominant idea of medi- 
, aeval thinkers—the idea of status or class. Men, they taught, had 
been placed by God in ranks or orders, each with its own work to do, 
and each with its own appropriate mode of life. That gain was justi¬ 
fied, and that only, which was sought in order that a man might 
provide for himself a fit sustenance in his own rank. 

There is the less need to dwell upon this doctrine of predetermined 
class distinctions, because it still survives in many 'quarters. In the 
Middle Ages, as now, it was used to inculcate lessons of obedience on 

1 Adapted with permission from W. J. Ashley, An Introduction to English 
Economic History and Theory, Part II, pp. 388-94. (London: Longmans, Green 
& Co., 1914.) 


SOME DIVERSE TYPES OF “WORK-ORGANIZATION” 


95 

the part of inferiors. But it must be remembered that class dis¬ 
tinctions were then as a matter of fact much more rigid and sharply 
marked than they are now; and also that the doctrine was employed 
with as much readiness to protect the weak as to keep them in “ their 
place.” 

With the canonists, this idea of class duties and class standard of 
comfort is either explicitly or implicitly referred to as the final test in 
every question of distribution or exchange. Thus Langenstein—who, 
after being vice-chancellor of the University of Paris, was called to 
teach at the new University of Vienna in 1384—lays down that every 
one can determine for himself the just price of the wares he may have 
to sell, by simply reckoning what he needs in order to suitably support 
himself in his rank in life. And he tells the lords of land that their 
only just claim to their rents is founded on their fulfilling the duties 
of their class, and rightly governing and protecting those subject to 
them. 

It is evident that the simple division of the laity into “ lords and 
commons,” “gentlemen and labourers,” could have been adequate 
only in the earlier and purely agricultural stages of feudal society. 
The position of the early craftsmen was probably sufficiently like that 
of the villeins for there to be little difficulty in allotting them to their 
proper class. But when a body of merchants made its appearance, 
it was not so easy to account for men whose obvious aim was to make 
profit. We have seen that there was a disposition among some of 
the Fathers to put trade under the ban. But although traces of this 
phase of thought are to be found in the earlier canon law, it exercised 
no practical influence over the teaching of the later Middle Ages. 
Canonists and theologians accepted without hesitation the justification 
of trade formulated by Aquinas, “Trade is rendered lawful when the 
merchant seeks a moderate gain for the maintenance of his household, 
or for the relief of the indigent; and also when the trade is carried 
on for the public good, in order that the country may be furnished 
with the necessaries of life, and the gain is looked upon not as the 
object, but as the wages of his labour.” The moralists usually justified 
trade—as Chaucer’s Parson did, following Aquinas, by a reference to 
the supply of the country’s needs: “It is honest and lawful that of 
the abundance of (one) country men help another country that is 
needy.” As a measure of just gain they fell back, as Aquinas had done, 
on the usual test—the standard of living of the class. This was a 
test which was more likely to seem applicable to real life then than 


q6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


now. The strong bent of political life towards the formation of 
“estates,” the obstacles in the way of competition, the customs of 
the trading companies, the sumptuary legislation and a number of 
other forces, all tended to throw men into clearly recognized social 
grades. But it is evident that the test allowed so wide a margin that 
it was much less applicable, practically, to the case of a merchant 
than to the case of a country squire with his customary receipts from 
his tenants, or to the case of a yardling living amidst'his fellows. It 
was indeed foreign trade which did more than any other force to break 
down the mediaeval social order. 

The view which regarded the shares obtained by individuals in the 
distribution of wealth as the return for the performance of the duty 
which their rank imposed upon them was closely connected with 
another as to the production of wealth. It has been usual until 
recently, with the rank and hie of modern economists, to speak of 
three “factors,” “instruments,” “agents,” or “requisites,” in pro¬ 
duction, viz. land, labour, and capital, and to put them all on very 
much the same level of importance. Mediaeval thinkers saw but 
two, land and labour. The land was the ultimate source of all wealth; 
but it needed human labour to win from it what it was able to provide. 
Labour, therefore, as the one element in production which depended 
on the human will, became the centre of their doctrine. All wealth 
was due to the employment of labour on the materials furnished by 
nature; and only by proving that labour had been engaged in bring¬ 
ing about the result could the acquisition of wealth by individuals be 
justified. “God and the labourer,” as one widely read theologian 
expressed it, “are the true lords of all that serves for the use of man. 
All others are either distributors or beggars”; and he goes on to explain 
that the clergy and gentry are debtors to the husbandmen and crafts¬ 
men, and only deserve their higher honour and reward so far as they 
fitly perform those duties, as “ruling classes,” which involve greater 
labour and greater peril. The doctrine had thus a close resemblance 
to that of modern socialists: labour it regarded both as the sole 
(human) cause of wealth, and also as the only just claim to the pos¬ 
session of wealth. It differed from modern socialist teaching only in 
allowing different kinds of services to society to be remunerated at 
very different rates. Yet it would certainly have visited with a 
similar condemnation the acquisition of wealth by sheer speculation, 
or by the manipulation of the market. 


SOME DIVERSE’TYPES OF “WORK-ORGANIZATION” 

PROBLEMS 


97 


1. Contrast the Greek craftsman, as pictured in Selection i, with (a) the 
modern factory hand, ( b ) the modern building trades worker, in the 
following particulars: nature of task, technique and skill, security of 
employment, financial reward, non-financial incentives, independence, 
breadth of outlook, physical comfort. 

2. What “work incentives” can you discover in the Greek industrial 
organization that are now used little or not at all ? Are they in disuse 
because they no longer can stimulate men, because “human nature” 
has changed, because they are impossible of attainment, or why ? 

3. Was “discipline” exerted in the Greek organization? What kind and 
how ? 

4. What were the dominating forces and agencies of social control in (a) 
the Greek state, ( b ) English medieval life ? Contrast them with each 
other and with those of today. 

5. Determine, if you can, how the leaders and organizers of work were 
chosen in each of the “work-organizations” presented in this section and 
what qualities were needed in these organizers. Contrast with qualities 
needed and methods of choosing business organizers today. Account 
for the differences. 

6. With which of the following groups in modern life would you say the 
medieval craft gilds were most nearly parallel in aims and organiza¬ 
tion: trade unions, chambers of commerce, medical or bar associations ? 
Why? 

7. “The Greek temples and the medieval cathedrals divide between them 
the honor of being the greatest examples of ‘mass production’ the world 
has ever seen.” In what sense were they “mass production” ? What 
are the significant points of contrast between these kinds of mass 
production and the modern kind as regards the part the worker plays 
in each ? 

8. “Society cannot get on without a basis of unpleasant and monotonous 
labor.” How was the drudgery taken care of in the days of the temple 
builders ? in the days of the cathedral builders ? Who does the drudg¬ 
ery now ? Has modern society more or less drudgery to be performed 
than these earlier periods ? Why ? 

9. List the advantages and disadvantages of slavery as a means of attain¬ 
ing efficient production. What do you consider the main reasons for 
the decline of the “slave power” ? 

10. “When a nation was brought under the sceptre of the Incas, it resigned 
every personal right, even the rights dearest to humanity.” What 
kind of an assumption about the origin of “rights” does this imply? 
Is the assumption correct ? What are the “rights dearest to humanity ” 
and where did they come from ? 


98 THE WORKER IN MODERN ECONOMIC SOCIETY 

n. Criticize the economic organization of the Incas as a scheme of national 
livelihood. What are your standards of judgment ? 

12. If you had been a social psychologist living in Peru in the days of the 
Incas, what generalizations about human nature would you have made ? 

13. “The strength of the craft gild was the strength of a ‘professional’ 
organization. Its weaknesses were the weaknesses of a too narrow and 
unrestrained professionalism.” What does this mean? What are the 
strength and weaknesses of organizations that depend on a “pro¬ 
fessional” tie? Could industry today be “professionalized” and its 
control vested in professional associations ? 

14. “ The great achievements of the modern western world rest on the freeing 
of individual initiative through the substitution of a relation of contract 
for one of status.” What does this mean in concrete terms ? Do you 
agree? How would you define “status”? Were men “free” in gild 
days ? Could they exercise individual initiative then ? more or less 
than today ? What is freedom, anyway ? individual initiative ? 

15. Look through the selections in this chapter and see if you can pick out 
any “principles” essential to any successful human co-operation in 
economic activity. Are the basic ones covered in Selection 2 ? How 
would this selection serve as a manual of management ? 

16'. What were (or what would you think might have been) the essential 
characteristics of the system of industrial education necessary for the 
worker ( a ) in the Greek state, ( b ) under the medieval craft gild regime ? 
Did it include training in “citizenship”? what kind of training? 
Contrast with the needs and character of industrial education today. 

17. “There have been, generally speaking, three basic assumptions on which 
industry has been organized by various peoples at various times: (1) 
organization of the industry by the workers for their benefit, (2) organ¬ 
ization of the industry by and for the community as a whole, (3) organi¬ 
zation in terms of financial success, on the supposition that the com¬ 
munity would benefit indirectly.” Do you agree with the classification ? 
Give an example of each type. 

18. “Men in industry are influenced not by economic environment alone, 
but by a thousand other things—religion, family ties, all social relation¬ 
ships. Why confine a study of the human aspects of industry to 
industrial organization? It should include all of life.” What is the 
answer ? 


CHAPTER V 


THE WORKER AND THE COMING OF CAPITALISM 

The purpose of the present chapter is to sketch in broad outline 
some of the main characteristics of modern economic organization in 
the light of their more immediate origins, with chief emphasis on the 
changes which have taken and are taking place in the relations between 
the men and groups of men engaged in industry. As in the preceding 
chapter, these selections should be regarded as a series of comparative 
glimpses; not as a history. The aim is an analysis of the present, 
not primarily a study of the past. For an adequate account of the 
period covered, roughly 1750 to the present day, the student is referred 
to the list of books for further reading given at the end of this chapter. 

An effort has been made to present industry as in continual pro¬ 
cess of change: a process which is going on today and which will 
continue in the future. It would of course be possible to secure 
valuable contributions to an understanding of modern economic 
organization far back in the feudal period and beyond, but for present 
purposes it will be sufficient to confine attention largely to the more 
rapid changes which have developed since 1750, the date which 
Toynbee assigned as the beginning of “the Industrial Revolution.” 
The present survey must, however, necessarily cover a much wider 
field than the particular period and the particular phenomena to 
which that apt phrase was originally applied. 

Economic and industrial change from 1750 to the present day 
may be regarded as fourfold in character: embracing changes in 
technique, methods, and processes; changes in internal organization; 
changes in commercial and financial organization; changes in domi¬ 
nant social and economic ideas. It will be realized that this is a 
separation for convenience only, since the four are closely inter¬ 
related and are, in fact, simply different aspects of the one complex 
whole. Changes in the market become responsible for changes in 
technique, and vice versa; both lead to changes in internal organiza¬ 
tion; all help to change ideas, which in turn lead to new changes in 
organization. 

Note, for example, the far-reaching influence of the outstanding 
fact of the nineteenth century: the growth and development of 


99 


ioo THE WORKER IN MODERN ECONOMIC SOCIETY 

/ 

scientific thought, or perhaps more accurately what we know as the 
scientific attitude of mind. It can be regarded truthfully as the 
creator of machine industry. Machine industry, resulting in instru¬ 
ments of precision, made possible the further development of science. 
Both, through the steamship and telegraph, made possible the world 
market; both have profoundly affected men’s minds and social ideas. 
There is no water-tight compartment separation in fact. 

For purposes of analysis, none the less, it has seemed convenient 
to arrange the material in rough correspondence with this fourfold 
classification rather than in terms of chronology. Each part should 
suggest enough chronological sequence to prevent confusion. 
Although the material deals in large part with English development, 
it is with that development as representative of the general experience 
of the western world. Certain peculiarly American features will be 
presented in chapter vi to follow. 

The general arrangement of the materials of the present chapter 
is, then, as follows: 

Section A (The Transition) serves as an introductory sketch of the 
changes in the internal organization of industry which accompanied 
the break-up of gild economy, the widening of the market, and the 
beginnings of capitalist economy before the coming of the machine. 
(Selections 1-3.) Selection 4 presents a panoramic sketch of the 
complex ramifications of the mechanical changes of the late eighteenth 
and early nineteenth centuries, together with some suggestions as to 
their effects on population and its distribution. 

Section B {The Worker and the New Technique ) turns to the more 
purely technological aspects of industry. Selection 5 a gives Marx’s 
classic analysis of the change from a rule-of-thumb to a scientific 
technique, and the transfer of skill from the worker to the machine. 
This is followed in 5 b by a modern American study of the influence of 
the machine. The two citations in Selection 6 deal with some indirect 
effects of machine technique on modern life. Selection 7 looks back 
at some of the changes in the life of the operative which the machine 
brought with it in its early incidence. 

Section C {The Worker and the New Commercial Organization ) looks 
at industrial evolution from the commercial and pecuniary aspect. 
Selection 8 (in a) develops the relationship between mechanical trans¬ 
port, the growth of the market, and the rise of towns, and (in b ) 
shows the occupational shifts which have attended these changes. 
Selection 9 pictures (in a) the complexity and interdependence of 


THE WORKER AND THE COMING OF CAPITALISM 


IOI 


the pecuniary market society of today x and (in b) suggests the change 
in the meaning of “capitalism” and in the terms “capital” and 
“labor” which have taken place since they were first employed. 

Section D (The Change in Social Ideas) suggests very briefly some¬ 
thing of the change in social thought which has accompanied the 
changes developed in the other three sections. 

A. The Transition 

i. THE BEGINNINGS OF THE REVOLUTION 1 

We turn now to the beginnings of the modern industrial period. 
Although the institution of apprenticeship continued in England with 
slight change down to the days of Adam Smith, modifications in the 
organization of industry began to appear as early as the sixteenth 
century. 

“In the earlier craft gilds,” says Cheyney, in his Industrial and 
Social History of England , “each man had normally been successively 
an apprentice, a journeyman, and a full master craftsman, with a 
little establishment of his own and full participation in the administra¬ 
tion of the fraternity. There was coming now to be a class of artisans 
who remained permanently employed and never attained to the posi¬ 
tion of master craftsmen. This was sometimes the result of a deliber¬ 
ate process of exclusion on the part of those who were already masters.” 

This process stimulated the formation of separate journeymen 
gilds, whose relations with the masters were often represented by 
written agreements between the two groups. The result was the 
gradual development of distinct dominant and subordinate classes 
within the gild structure. There was also a continuous pressure 
from within the gild by the more adventurous masters desirous of 
breaking down gild regulations and attacking gild monopoly priv¬ 
ileges. Gild control seems to have degenerated more and more as 
time went on into a rigid rule by small and influential cliques, stimulat¬ 
ing natural resentment and jealousy among the lesser members. 

Furthermore, national and world-events conspired from without 
to break up the gild economy. The development of highways and 
better methods of communication, with the growth of national as 
against local political control (as typified especially by the reign of 
Elizabeth) made for a more national economy with legislative regula¬ 
tion growing in importance. Agrarian changes, taking place largely 


1 Prepared. 


102 


THE WORKER IN MODERN ECONOMIC SOCIETY 


as a result of the expansion of the market for wool, assisted powerfully 
through the sixteenth and seventeenth 1 centuries in changing the 
country from a rustic to an urban community by breaking up manorial 
life and sending the dispossessed classes to the towns. 

Wholesale manufacture began to come into being, at first, of course, 
without more than the rudimentary use of machinery. “In the fac¬ 
tory of van Robais as many as 1,692 workpeople were employed before 
the end of the seventeenth century. Many workers no longer lived 
or worked with their masters, and these were beginning to form a 
class apart. As yet, however, the divorce of man from master was 
the exception rather than the rule. Though, even in the time of 
Adam Smith, by far the greater number of the manufacturers, artisans, 
or handicraftsmen worked for a master, the usual workshop was but 
a small affair employing anything from two to a dozen hands. In 
such places master and man worked together.” 2 

Behind all this lay the growth of the world-market. 

“The discovery of America,” says the Communist Manifesto, 
“the rounding of the Cape, opened up fresh ground for the rising 
bourgeoisie. The East-Indian and Chinese markets, the colonisation 
of America, trade with the colonies, the increase in the means of 
exchange and in commodities generally, gave to commerce, to navi¬ 
gation, to industry, an impulse never before known, and thereby, to 
the revolutionary element in the tottering feudal society, a rapid 
development. 

“The feudal system of industry, under which industrial production 
was monopolised by close guilds, now no longer sufficed for the grow¬ 
ing wants of the new markets. The manufacturing system took its 
place. The guild-masters were pushed on one side by the manu¬ 
facturing middle-class; division of labour between the different cor¬ 
porate guilds vanished in the face of division of labour in each single 
workshop. 

“Meantime the markets kept ever growing, the, demand ever 
rising. Even manufacture no longer sufficed. Thereupon, steam and 
machinery revolutionised industrial production. The place of manu¬ 
facture was taken by the giant Modern Industry, the place of the 
industrial middle-class, by industrial millionaires, the leaders of whole 
industrial armies, the modern bourgeoisie. , 

1 Although the first Enclosure Act was passed in 1606, the Enclosure movement 
had been going on all through the sixteenth century and before. 

2 Gilbert Stone, A History of Labour, p. 151. 


THE WORKER AND THE COMING OF CAPITALISM 


103 


“ Modern Industry has established the world-market, for which 
the discovery of America paved the way. This market has given an 
immense development to commerce, to navigation, to communication 
by land. This development has, in its turn, reacted on the exten¬ 
sion of industry; and in proportion as industry, commerce, naviga¬ 
tion, railways extended, in the same proportion the bourgeoisie devel¬ 
oped, increased its capital, and pushed into the background every 
class handed down from the Middle Ages.” 

2. THE NEW DIFFERENTIATION OF CLASSES 1 

On the small stage of the town economy the mediaeval master 
craftsman contrived to combine quite a number of parts, each 
of which demands, nowadays, the concentrated attention of several 
classes of specialists. The first separation arose from the fact that as 
the master craftsman found more scope for his activity as a foreman, 
an employer, a merchant, and a shopkeeper, he left the manual labour 
entirely to his journeymen and apprentices. Since the extension of 
these other functions involved the possession of more capital and 
more ability than are at the command of the average journeyman, only 
a favoured few could hope to become masters, and the rest came to 
form a separate body of workmen. As the interest of these journey¬ 
men was no longer represented by the master’s gild, they sought to 
form an organization of their own, which in England was known as 
the Yeomanry. The development so far may be graphically repre¬ 
sented thus: 

Craftsman = 

Workman+Foreman+Employer-TMerchant-f Shopkeeper 

(Early Gild) 


Trading Master = Journeyman = W 

F+E+M+S 

(Later Gild) (Yeomanry Organization) 

But this early separation of the workman’s function was not 
permanent. As the volume of his trade increased, the further develop¬ 
ment of the master’s activity as employer, merchant, and shopkeeper, 
left him no time to act as foreman to his workmen; and since the 
journeyman was now a married man and a householder, it was pos- 

1 Adapted with permission from George Unwin, Industrial Organization in the 
Sixteenth and Seventeenth Centuries , pp. 10-13. (The Clarendon Press, 1904.) 




104 


THE WORKER IN MODERN ECONOMIC SOCIETY 


sible to save much of the labour of superintendence by giving him 
piecework to do in his own home. In this way the journeyman was 
raised to the dignity of a small master and in addition to the part of 
workman he now undertook the part of foreman to journeymen and 
apprentices of his own, who expected in due course to be small masters 
themselves, and did not therefore form a separate class. The redis¬ 
tribution of functions may be represented thus: 

Merchant Employer = M+S+E Small Master = F+W 

The next stage of development was somewhat more complicated. 
In the first place some of the small masters acquired capital enough 
to supply themselves with material. As long as this was only sufficient 
for a hand-to-mouth kind of existence they continued to be economi¬ 
cally dependent on the trader who found them a market, but as 
their capital increased and they grew from small masters to large 
masters, they were able to deal with him on a more equal footing. 
The new capital thus built up was not employed primarily in trading, 
but in bringing together a greater number of workmen, belonging 
sometimes to different branches of a manufacture, and thus organiz¬ 
ing industry upon a larger scale. In this way the function of the 
employer was passing out of the hands of the trading capitalist into 
those of the industrial capitalist. If the large master had covered 
the whole field of industry, the journeyman would now have been in 
the position of the modern wage-earner, restricted to the function of 
workman. But the class of small masters, whether employed by the 
large master or the trader, was still very numerous, and afforded a 
fairly easy alternative to the discontented or ambitious journeyman. 
When it is added that besides the trader, who had ceased to be an 
employer, there was also growing up a class of merchants who confined 
themselves to the larger operations of commerce, it will be seen that 
the range of classes at this point may be expressed roughly as follows: 


Large 

Large and 

Merchant 

Large 

Small , Journeyman 

Merchant 

Small 

Shopkeepers 

Employer 

Master 

Master 

M 

M+S 

M+E 

E+F 

F+W W 


The process of class formation so far described covered a period 
of at least four centuries, i.e., from the end of the thirteenth to the 
end of the seventeenth century. It is unnecessary for the present 
purpose to follow the development further in detail. To indicate its 


THE WORKER AND THE COMING OF CAPITALISM 


105 


broad results will be sufficient. The great inventions of the eighteenth 
century accelerated the movement already in progress towards the 
capitalization of industry, the final outcome of which was the modern 
factory system. In most of the leading industries the small master 
was driven to enter the wage-earning class, whilst the large master was 
transformed into the modern capitalist employer, who leaves the 
internal and technical affairs of his business largely to the management 
of subordinates in order that he may devote himself more fully to its 
relations with the outer business world. Nowadays the functions of 
employer, foreman, and workman belong to entirely separate classes; 
and, indeed, to say merely this is very far from expressing the degree 
of specialization that has taken place in the internal economy of the 
great industrial concern. 


3. SUBSEQUENT CHANGES IN THE INTERNAL 
ORGANIZATION OF INDUSTRY 1 


In the study of the composition of capital, labour, and direction 
in a business, the following are points of dominant importance: 


Capital 


(a) 

b) 

t) 


d) 

e) 

f) 


The ownership of the raw material. 

The ownership of the tools and sources of non-human power. 
The ownership of the workplace. 

The labour-power. 

The work of superintendence and management. 

The work of marketing. 


In other words, in the operation of an industrial business, an 
employer organises and directs the application of labour-power work¬ 
ing with tools upon raw materials in a workshop or factory, and 
sells the product. Now all these six functions may be combined in a 
single person or family, or they may be divided in various ways among 
two or many persons. The simplest form of manufacturing business 
would be one in which an industrial family, growing or buying the 
materials and tools, and working with the power of their own bodies 
in their own home, under the direction of the head of the household, 
produce commodities, partly for their own consumption, partly for 
a small local market. 

Omitting all consideration of the virtually self-sufficing economy 
of the farmers and cottagers who, producing food, clothing, etc., for 


1 Adapted with permission from J. A. Hobson, Evolution of Modern Capitalism, 
pp. 55-62. (Charles Scribner’s Sons, 1912.) 



io6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


their own consumption, cannot rank as business-units for our purposes, 
we find even in eighteenth-century England a large number of town 
and rural industries in which the differentiation from the primitive 
type has only just begun. ♦ 

The simplest structure of “domestic” manufacture is that in 
which the farmer-manufacturer is found purchasing his own material, 
the raw wool or flax if he is a spinner, the warp and weft if he is a 
weaver, and, working with his family, producing yarn or cloth which 
he sells himself, either in the local market or to regular master-clothiers 
or merchants. The mixed cotton weavi ng trade was in this condition 
in the earlier years of the eighteenth century. “The workshop of 
the weaver was a rural cottage, from which, when he was tired of 
sedentary labour, he could sally forth into his little garden, and with 
the spade or the hoe tend its culinary productions. The cotton-wool 
which was to form his weft was picked clean by the fingers of his 
younger children, and was carded and spun by the elder girls, assisted 
by his wife, and the yarn was woven by himself, assisted by his 
sons.” 

The weak point in this economy lay in the trouble and uncertainty 
of marketing the product. It was here that the merchant, who repre¬ 
sents the earliest form of industrial capitalism, presses in upon the 
self-employing artisan-capitalist. 

This stage, where the workman receives his “orders” and his 
“materials” from another, while retaining the disposal of his labour- 
power and working with his own tools in his own home or workplace, 
prevailed widely in the textile industries of rural England. 

The condition of the cotton-trade in Lancashire about 1750 
illustrates most clearly the transition from the independent weaver 
to the dependent weaver. So far as the linen warp of his fabric was 
concerned he had long been in the habit of receiving it from the larger 
“manufacturer” in Bolton or in Manchester, but the cotton yarn 
he had hitherto supplied himself, using the yarn spun by his own 
family or purchased by himself in the neighborhood. The difficulty 
of obtaining a steady, adequate supply, and the waste of time involved 
in trudging about in search of this necessary material, operated more 
strongly as the market for cotton goods expanded and the pressure 
of work made itself felt. It was this pressure which we shall see 
acting as chief stimulus to the application of new inventions in the 
spinning trade. In the interim, however, the habit grew of receiving 
not only linen warp but cotton weft from the merchant or middleman. 


THE WORKER AND THE COMING OF CAPITALISM 


107 


Thus the ownership of the raw material entirely passed out of the 
weaver’s hands though he continued to ply his domestic craft as 
formerly. This had grown into the normal condition of the trade 
by 1750. 

When the raw material is given out to an artisan by a merchant 
or another manufacturer there is a clear loss of independence, especially 
when this step is followed by the letting out of tools or machines. 
In London, as early as the thirteenth century, big mas ter-weavers 
seem to have hired out looms to small weavers. Similarly in the 
stocking-trade, at a much later period, “frames” as well as material 
were let out by merchants to the workers, who continued to work in 
their own homes. 

Two further steps remained to be taken in the transition from the 
“domestic” to the “factory” system, the one relating to the owner¬ 
ship of “power,” the other to the workplace: (a) the substitution of 
extra-human power owned by the employer for the physical power of 
the worker; ( b ) the withdrawal of the workers from their homes, and 
the concentration of them in factories and workplaces owned by the 
capitalists. 

Although these steps were not completely taken until the age of 
steam had well set in, before the middle of the eighteenth century 
there were found examples of the factory, complete in its essential 
character, side by side and in actual competition with the earlier shapes 
of domestic industry. 

Thus by a series of economic changes the several functions of the 
independent craftsman have been taken from him, until he is left in 
possession of his labour-power alone, which he must sell to an employer 
who furnishes materials, tools and machinery, workplace, and super¬ 
intendence, and who owns and markets the production of his labour. 
From a free craftsman he has passed into a “hired hand.” 

Regarding the business as a combination of labour and capital, 
we perceive that one strongly distinctive characteristic of the pre¬ 
machinery age is the small proportion which capital bears to labour in 
the industrial unit. It is this fact that enabled the “domestic” 
worker to hold his own so long in so many industries as the owner of 
a separate business. So long as the mechanical arts are slightly 
developed and tools are simple, the proportion of “fixed capital” to 
the business is small and falls within the means of the artisan who plies 
his craft in his home. So long as tools are simple, the processes of 
manufacture are slow, therefore the quantity of raw material and other 


io8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


“circulating capital” is small and can also be owned by the worker. 
The growing divorcement in the ownership of capital and labour 
in the industrial unit will be found to be a direct and most important 
result of those improvements in mechanical arts which, by continually 
increasing the proportion of capital to labour in a business, placed 
capital more and more beyond the possession of those who supplied 
the labour power required to co-operate in production. 

4. THE ADVENT OF THE MACHINE AND ITS INFLU¬ 
ENCE ON THE WORLD-COMMUNITY 

a) THE GREAT INVENTIONS 1 

Steam in its turn created a new demand for iron. To make 
machines, iron tools, steam hammers, etc., were needed, and large and 
entirely new branches of industry developed, viz., engineering shops 
to make machines. But masses of iron ore could never have reached 
coal in sufficient quantities had not new methods of transport been 
utilized, and these new methods of transport—the railway and the 
steam ship—began in their turn to make fresh demands on iron and 
coal; iron for locomotives, rails, and parts of coaches and wagons, 
iron for marine engines, and iron for the ship itself; coal for the locomo¬ 
tives and engines of both. In addition to this there were great de¬ 
mands for iron for renewals of machinery, railway rolling stock and 
new ships. 

The population, therefore, continued to mass in the region of the 
coal and iron areas, extending outwards as railways extended the 
distribution of pig-iron and coal. 

Apart from special and exceptional circumstances, industry in 
Europe and the United States tends to grow up within easy railway 
access to the great coal areas and on these areas the population is 
massed in towns. 

The so-called “industrial revolution” comprised six great changes 
or developments all of which were interdependent. It involved in 
the first place the development of engineering. Engineers 2 were 
required to make and repair the steam engines, to make machinery 
for the textiles, to make machinery for lifting coal out of the pit, to 
make machine tools and locomotives. The only engineers before the 

1 Adapted with permission from L. C. A. Knowles, The Industrial and Commer¬ 
cial Revolutions in Great Britain during the Nineteenth Century, pp. 18-25. (E. P. 

Dutton & Co., 1921.) 

2 The American equivalent for “engineer” (English usage) is “mechanic” 
or “machinist.” 


THE WORKER AND THE COMING OF CAPITALISM 109 

middle of the eighteenth century were men who repaired the mechan¬ 
ism of the flour mills—the millwrights; the iron workers were black¬ 
smiths. Skilled engineers had to train themselves from the beginning 
by learning as they went on. Engineering, however, depended on the 
iron-founders. Unless the iron was smelted in quantities and of 
sufficiently good quality the engineers could not get material on which 
to work, so that a revolution in iron-making was the second develop¬ 
ment which almost necessarily preceded machinery. The iron works 
in both England and France before 1750 were little local forges 
scattered all over the country, partly to get wood for smelting, partly 
to avoid the difficult transport of bulky awkward articles like iron 
goods when roads were only earthen tracks. But the iron-founders 
would not have been able to concentrate and develop their works on a 
large scale had not a large demand existed for iron for steam engines, 
machinery and other factory equipment. 

The third change came when mechanical devices moved by water 
or steam power were applied in the textiles. They began in the simple 
operation of spinning. This created a surplus of yarn and a weaving 
machine was gradually adopted to use up the yarn. The inventions 
started in cotton, spread to wool, then to flax and to silk. 

A fourth development then became necessary. The bleaching, 
dyeing, finishing or printing processes had all to be accelerated or 
transformed to keep pace with the output of the piece goods and this 
meant the creation of the great chemical industries. They in their 
turn required engineering plant with a consequent reaction on the 
metallurgical industries which were already experiencing a fresh de¬ 
mand owing to the adoption of iron machinery in the textiles. Indeed 
the tendency of the textiles to develop in the neighborhood of the 
iron works was very marked because then they could get their 
machinery repaired. 

Engineering, iron-founding, textile machinery and industrial 
chemistry all hinged ultimately on coal. The great development of 
coal mining is the fifth great change comprised in the term “industrial 
revolution.” Coal in the form of coke was needed by the blast 
furnaces to smelt the iron ore into the cohesive form known as pig- 
iron; coal was needed to re-smelt the pig-iron and cast it into the form 
in which it was required by the engineers; it was needed for the new 
motive power—steam. Coal could not, however, have been obtained 
from the pits in sufficient quantities had not the engineers devised and 
made a steam engine which pumped the water out of the mines. 


no 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Each of these series of inventions depended in turn on the others 
and the reason for their spread in the nineteenth century lies in the 
fact that they all reached a point in the eighteenth where they could 
be utilized together so that they reacted on and stimulated each other. 
It is no accident, however, that they should have developed in Great 
Britain soon after the founding of the Bank of England in 1694. 
Capital had to be accumulated in sufficient quantities to allow of 
the expensive preliminary works to be undertaken and the experi¬ 
ments applied on a large scale. 

Finally the mass production by machinery in factories, of iron in 
blast furnaces, the development of great engineering and chemical 
works and the growth of coal mining could not have attained their 
present overwhelming importance had there not been a corresponding 
development in the means of transport which facilitated the move¬ 
ment of food to feed the population gathered on the coal and iron 
areas, which enabled the transference of the vast quantity of fuel and 
raw materials, cotton, wool, oils, fibres, timber, ores and chemicals 
required to feed the factories, and which was instrumental in distribut¬ 
ing the vast bulk of the manufactured articles. 

The industrial revolution, as a matter of fact, falls into two epochs 
corresponding to the means of transport at each period. The first 
phase coincides with an improvement in roads and inland water-ways. 
With the railways and steamships the transformation proceeded at 
an enormously accelerated pace and a second phase of the industrial 
revolution began. 

See also Selection 5 b, chapter vi, “The Development of the Steel 
Industry.” 

b) OCCUPATIONAL ESTIMATES OE ENGLISH POPULATION IN 

1688 AND 1769 1 

KING’S ESTIMATE OF THE POPULATION, 1688 

Agricultural Classes (Freeholders, Farmers, Labourers, Outservants, 

Cottagers, Paupers 

4,265,000 


_j Manufacture 

240,000 


_| Commerce 

246,000 


1 Taken with permission from John A. Hobson, The Evolution of Modern 
Capitalism , p. 42. (Charles Scribner’s Sons, 1912.) 






THE WORKER AND THE COMING OF CAPITALISM 


III 


YOUNG’S ESTIMATE, 1769 


Agricultural Classes* 3,600,000 


Manufacturing Classes 3,000,000 


Commerce 


700,000 


Paupers 


600,000 


Military 
& Official 


500,000 


Professional 200,000 


c) ENGLISH POPULATION IN MINING AND MANUFACTURING 

AREAS, 1851-1901 1 

The growth of the population in England and Wales in the mining 
and manufacturing area may be seen from the following table (oooo’s 
omitted): 


Date 

Total 

Population 

(United 

Kingdom) 

Mining North¬ 
ern Counties 

Manufacturing 

Midland 

Rest of England 
and Wales 
excluding the 
County of 
London 

1851. 

27-37 

451 

276 

829 

1861. 

28.93 

529 

364 

953 

1881. 

34.88 

757 

427 

1030 

1891. 

37-73 

862 

489 

1126 

1901. 

41.46 

976 

568 

1255 


It will be noticed that the population doubled in fifty years in the 
mining and * manufacturing regions, while the rest of the United 
Kingdom only increased 50 per cent. 

1 Adapted with permission from Arthur L. Bowley, An Elementary Manual of 
Statistics, p. 89. (P. S. King & Son, Ltd., 1910.) 

























112 


THE WORKER IN MODERN ECONOMIC SOCIETY 


d ) POPULATION OF ENGLAND AND WALES, 17OO-19II 1 
ESTIMATES BASED ON THE BAPTISMAL REGISTERS 


Year . Persons 

1700. 5 > 475 j 000 

1710. 5,240,000 

1720. 5 > 565 >°°° 

1730. 5>796,ooo 

1740. 6,064,000 

1750. 6,467,000 

1760. 6,736,000 

1770. 7,428,000 

1780. 7,953,000 

1790. 8,675,000 

1800. 9,168,000 


CENSUS RETURNS 


Year Persons 

l8oi. 8,892,000 

l8ll. 10,164,000 

l 82 I. 12,000,000 

1831. 13,896,000 

1841. 15,914,000 

1851. 17,927,000 

l86l. 20,066,000 

1871. 22,712,000 

l88l. 25,974,000 

1891. 29,002,000 

1901. 3 2 > 5 2 7 *°°o 

1911. 36,070,000 


See also Selection 8: The Commercial Revolution and Population. 

B. The Worker and the New Technique 
5. SKILL AND THE MACHINE 

* 

a) SCIENCE SUCCEEDS RULE OF THUMB 2 

All fully developed machinery consists of three essentially differ¬ 
ent parts, the motor mechanism, the transmitting mechanism, and 
finally the tool or working machine. An organized system of 

1 Taken from Abstract of the Answers and Returns (Census 1821), Preliminary 
Observations, p. xxix. The figures differ somewhat from figures published in 1831. 

2 Adapted with permission from Karl Marx, Capital, pp. 407, 416-22, 45Q-60. 
(Charles H. Kerr & Co,, 1909. Translated from Third German Edition.) 



























THE WORKER AND THE COMING OF CAPITALISM 


113 

machines, to which motion is communicated by the transmitting 
mechanism from a central automaton, is the most developed form of 
production by machinery. Here we have, in the place of the isolated 
machine, a mechanical monster whose body fills whole factories, and 
whose demon power, at first veiled under the slow and measured 
motions of his giant limbs, at length breaks out into the fast and 
furious whirl of his countless working organs. 

As inventions increased in number, and the demand for the 
newly discovered machines grew larger, the machine-making industry 
split up, more and more, into numerous independent branches, and 
division of labour in these manufactures was more and more developed. 
Here, then, we see in Manufacture the immediate technical foundation 
of Modern Industry. Manufacture 1 produced the machinery by 
means of which Modern Industry abolished the handicraft and manu¬ 
facturing systems in those spheres of production that it first seized 
upon. The factory system was therefore raised, in the natural course 
of things, on an inadequate foundation. When the system attained 
to a certain degree of development, it had to root up this ready-made 
foundation, which in the meantime had been elaborated on the old 
lines, and to build up for itself a basis that should correspond to its 
methods of production. Just as the individual machine retains a 
dwarfish character so long as it is worked by the power of man alone, 
and just as no system of machinery could be properly developed before 
the steam engine took the place of the earlier motive powers, animals, 
wind, and even water; so, too, Modern Industry was crippled in its 
complete development so long as its characteristic instrument of pro¬ 
duction, the machine, owed its existence to personal strength and 
personal skill, and depended on the muscular development, the keen¬ 
ness of sight, and the cunning of hand, with which the detail work¬ 
men in manufactures, and the manual labourers in handicrafts, wielded 
their dwarfish implements. 

Thus, apart from the dearness of the machines made in this way, 
a circumstance that is ever present to the mind of the capitalist, the 
expansion of industries carried on by means of machinery, and the 
invasion by machinery of fresh branches of production, were dependent 
on the growth of a class of workmen, who, owing to the almost artistic 
nature of their employment, could increase their numbers only 
gradually, and not by leaps and bounds. But besides this at a certain 
stage of its development, Modern Industry became technologically 

; “Manufacture” is here used in its literal sense, “making by hand”—E d. 


114 THE WORKER IN MODERN ECONOMIC SOCIETY 

incompatible with the basis furnished for it by handicraft and Manu¬ 
facture. The increasing size of the prime movers, of the trans¬ 
mitting mechanism, and of the machines proper, the greater com¬ 
plication, multiformity and regularity of the details of thbse machines, 
as they more and more departed from the model of those originally 
made by manual labour, and acquired a form, untrammelled except 
by the conditions under which they worked, the perfecting of the 
automatic system, and the use, every day more avoidable, of a more 
refractory material, such as iron instead of wood—the solution of 
all these problems, which sprang up by the force of circumstances, 
everywhere met with a stumbling-block in the personal restrictions 
which even the collective labourer of Manufacture could not break 
through, except to a limited extent. Such machines as the modern 
hydraulic press, the modern powerloom, and the modern carding 
engine could never have been furnished by Manufacture. 

Modern Industry had therefore itself to take in hand the machine, 
its characteristic instrument of production, and to construct machines 
by machines. It was not till it did this, that it built up for itself a 
fitting technical foundation, and stood on its own feet. The imple¬ 
ments of labour, in the form of machinery, necessitate the substitu¬ 
tion of natural forces for human force, and the conscious application 
of science, instead of rule of thumb. 

Along with the tool, the skill of the workman in handling it passes 
over to the machine. The capabilities of the tool are emancipated 
from the restraints that are inseparable from human labour-power. 
Thereby the technical foundation on which is based the division of 
labour in Manufacture is swept away. Hence, in the place of the 
hierarchy of specialised workmen that characterises manufacture, 
there steps, in the automatic factory, a tendency to equalise and 
reduce to one and the same level every kind of work that has to be 
done by the minders of the machines; in the place of the artificially 
produced differentiations of the detail workmen, step 'the natural 
differences of age and sex. 

So far as division of labour re-appears in the factory, it is pri¬ 
marily a distribution of the workmen among the specialised machines; 
and of masses of workmen, not however organized into groups, 
among the various departments of the factory, in each of which they 
work at a number of similar machines placed together; their co¬ 
operation, therefore, is only simple. The organised group, peculiar to 
manufacture, is replaced by the connexion between the head workman 


THE WORKER AND THE COMING OF CAPITALISM 


US 

and his few assistants. The essential division is, into workmen who 
are actually employed on the machines (among whom are included a 
few who look after the engine), and into mere attendants (almost 
exclusively children) of these workmen. Among the attendants are 
reckoned more or less all “Feeders” who supply the machines with 
the material to be worked. In addition to these two principal classes, 
there is a numerically unimportant class of persons, whose occupation 
it is to look after the whole of the machinery and repair it from time 
to time; such as engineers, mechanics, joiners, etc. This is a superior 
class of workmen, some of them scientifically educated, others brought 
up to a trade; it is distinct from the factory operative class, and 
merely aggregated to it. This division of labour is purely technical. 

b ) THE IRON MAN 1 

First, the man and the beast; then, the man and the hand-tool; 
now, the man and the machine-tool! 

This is the century of the automatic machine. The social problem 
is to accommodate the use of automatic machinery to the well-being 
of the masses; our political problem is to avert class and state wars 
growing out of quarrels over the profits, powers, and privileges accru¬ 
ing through the production and marketing of goods. Much of our 
modern heart-searching, if intelligently directed, leads down to the 
Iron Man at the base of the industrial structure. He claims the 
twentieth century as his; the social and economic forces that he 
releases are those most likely to carry on into the future the reality 
of our day. 

“Machine-tools may be classified in two main groups: those 
which lengthen and strengthen the arm of the worker without displa¬ 
cing his will as the vital function of work, and those whose principal 
function is to supplant the worker, or to reduce his function to a 
minimum.” 

An example of the first class is the jib crane. The operator must 
direct the machine; his mind must work with his muscle, precisely 
as his forbears had to apply both mind and muscle to their simple 
levers. 

In the second class, the ability to do the work is a primary function 
of the machine itself, and inherent in the mechanism. Designed to 
accomplish its task independent of human direction, the attendant 

■ Adapted with permission from Arthur Pound, The Iron Man in Industry , 
pp. 1-8, 14-16, 22-24, 41-46, 34- (Atlantic Monthly Press, 1922.) 


n6 THE WORKER IN MODERN ECONOMIC SOCIETY 

need not know the necessary steps that the machine takes in doing 
the work. He need not know how to repair it in case of a jam: 
that is another man’s job. All the attendant is required to do is to 
feed the machine with material and relieve it of produce. Even 
starting and stopping the machine may be done by another, so 
minutely is the work-function divided. 

Of course, there are varying degrees of completeness in the applica¬ 
tion of the self-functioning principle to machinery. Some machines 
are nearly automatic. The pneumatic riveter, for instance, requires 
skill for its operation, but the technique is more easily attained than 
that of the hand-riveter. However, the trend toward complete autom¬ 
atization is strong and steady throughout industry. 

The war, with its insistent demand for quantity and its terrible 
drain upon labor-power, immensely stimulated the development of 
the Iron Man. Shifting the industrial function from the man to the 
machine produced, and is still producing, corresponding shifts in other 
fields of action. The balance of economic power was disturbed, with 
consequent notable reactions upon society, precisely as the political 
structure of the globe shakes whenever the economic balance of 
power is upset. 

Transferring the vital function of production from the operative 
to the machine involves taking a certain skill away from the rank and 
file and concentrating it in the directing and organizing end of industry. 
The heats of competition, playing through machine improvements, 
evaporate skill from the lower reaches of industry and distill it in the 
upper reaches. Fewer producers need skill; but those few require 
much longer training and more highly intensified mental powers. 
It is up to them, not only to design, build, place, and adapt machines 
to involved tasks, but also to work out systems under which the produc¬ 
tion of those machines can be coordinated and the produce distributed. 

To fit an automatic machine for its production-cycle requires high 
skill in tool-designing and pattern-making. Head and hand must 
work togejther; jigs and dies must be of the utmost precision. The 
number of skilled workmen required for this task is small compared 
to the whole number of industrial employees; but the group is of 
key importance. In the past, these men were trained under the 
apprentice system; but that system being in decline, industrial 
executives are greatly concerned for the future supply of such crafts¬ 
men. They look to public education to guard against a famine of 
skilled artisans, and such is their influence, that they are not likely 


THE WORKER AND THE COMING OF CAPITALISM 


117 

to look in vain. The call of industry has been answered already by 
the establishment of technical high-schools and colleges in many 
industrial cities as well as by the erection of private trade-schools. 
In desperation some employers have established their own trade- 
schools, but the outlook is that public education, thus challenged, 
will take up the burden of providing industry with skilled mechanics. 
Once adequate facilities are provided, we may look with assurance 
for the greater mental interest attaching to that work to provide 
candidates in abundance, and so increase the number of qualified men 
to the point where the pay shall approach that of the machine- 
tender—always being enough more, presumably, to make up for the 
time and cost of training. 

Let us examine the effect of automatic and semi-automatic machin¬ 
ery upon the minds of its attendants—the mill operatives. Such 
machines make relatively small demands upon the wits of their 
companions, the operative’s job is more passive, mentally, than 
active. Once his limited function is learned, once the man knows how 
to place standardized material in proper, predetermined fashion, he 
can earn his pay without further mental effort. He must be atten¬ 
tive, must “dot and carry one” exactly so, because the machine is 
valuable, and failure to move when and as directed may cost his 
employer more in spoilage than the operative’s yearly wage. The 
man is not so much driven, as paced; his usefulness depends upon his 
never failing the strident call of the Iron Man. He nurses his charge, 
feeds it, relieves it of produce, and perhaps makes slight repairs in 
a jam. But, if the case is serious, he calls a machinist, just as an 
infant’s nurse calls for the physician in emergency. 

Assembling of interchangeable machined parts proceeds, in efficient 
plants, with almost equally minute division of function. Your auto¬ 
mobile frame, let us say, is hoisted so that it may acquire axles. Then 
it moves along a conveyer, before gangs of men, each of whom per¬ 
forms thereon a certain specified task for which just so much time 
is allowed, because the conveyer moves at a fixed rate of speed, and 
each gang is allotted a space alongside, and moves forward and back 
in that space as the conveyer works. One attaches the right front- 
wheel; another the left rear-wheel; a third tightens certain screws 
with a pneumatic wrench. Let a single human fail in his assignment, 
and rather than permit that delay to clog the whole line of cars in 
process, the lagging unit is pulled out of line, to await the next shift. 
Thus, within an hour from the time a naked frame starts down the 


Il8 THE WORKER IN MODERN ECONOMIC SOCIETY 

assembly line, a shrewd and swiftly moving division of labor has 
completed thereon a finished motor-car, capable of moving to the 
loading docks under its own power. Its power-plant has been both 
painted and dried within the hour. 

In that swift progress hundreds of men have worked upon each 
car, combining into effectiveness the work of other thousands, whose 
produce is brought up by truck from storerooms and source-factories, 
and rushed into assigned positions. Each man performs the same 
task over and over: tightens identical nuts, lifts identical parts off a 
rack, and applies each one of them precisely to a something that is 
exactly like its predecessor to the thousandth of an inch. This 
accurate, monotonous toil goes on swiftly, amid hissing air-valves and 
paint-streams, roar of drying ovens, clatter of tools, thunder of 
trucks arriving and departing. As evidence of the organizing faculty 
in master minds, as a study in unity and synchronized power over 
divers beings and things, the action is impressive, in totality almost 
beautiful; but for its individual contribution it leaves something to 
be desired as an expression of the art of life. Not altogether for this, 
surely, is man made. 

Some of these operations involve much muscular effort, others 
little; but whether little or much, each operative uses the same set 
of muscles, for approximately the same length of time, in each repeti¬ 
tion of his assigned operation. Roustabouts enjoy far more of the 
luxury of variety in toil than machine tenders in automatized factories. 

In general, machine-production of goods involves less muscular 
and sensory strain than that put forward under the handicraft system. 
Fatigue in industrial workers must be ascribed more to monotony in 
movement and problem than to foot-pounds of energy expended. 
One may use merely his finger-tips feeding metal discs into a machine, 
and yet be as weary in the evening as if he had beefi swinging an 
axe. The lumberjack’s weariness is an all-round fatigue, and he is 
ready for bed at sundown; whereas industrial workers seem moved 
to abnormal activity after working hours. My fellow citizens, most 
of whom work in factories where the industrial function is minutely 
divided, and where machines set the pace, display astonishing energy 
in after-work pursuits. The married men reestablish their equilibrium 
by gardening prodigiously, and tinkering furiously around their homes 
—a socially satisfactory adjustment. The homeless rush hither and 
thither by motor when they are flush; or wander aimlessly around 
the streets when they are broke. Books and quiet conversation are a 


THE WORKER AND THE COMING OF CAPITALISM 


119 

bit too tame for men who feel that, while they get their livings in the 
shop, they must live their lives outside the shop. 

6. SOME INDIRECT EFFECTS OF MACHINE TECHNIQUE 

a) THE REIGN OF STANDARDIZATION 1 

Standard physical measurements are of the essence of the 
machine’s regime. The modern industrial communities show an 
unprecedented uniformity and precise equivalence in legally adopted 
weights and measures. Something of this kind would be brought 
about by the needs of commerce, even without the urgency given to 
the movement for uniformity by the requirements of the machine 
industry. But within the industrial field the movement for standard¬ 
ization has outrun the urging of commercial needs, and has penetrated 
every corner of the mechanical industries. The specifically com¬ 
mercial need of uniformity in weights and measures of merchantable 
goods and in monetary units has not carried standardization in these 
items to the extent to which the mechanical need of the industrial 
process has carried out a sweeping standardization in the means by 
which the machine process works, as well as in the products which it 
turns out. 

Tools, mechanical appliances and movements, and structural 
materials are scheduled by certain conventional scales and gauges; 
and modern industry has little use for, and can make little use of, what 
does not conform to the standard. 

The materials and moving forces of industry are undergoing a 
like reduction to staple kinds, styles, grades, and gauge. Even such 
forces as would seem at first sight not to lend themselves to standard¬ 
ization, either in their production or their use, are subjected to uniform 
scales of measurement; as, e.g., water-power, steam, electricity, and 
human labor. The latter is perhaps the least amenable to standard¬ 
ization, but, for all that, it is bargained for, delivered, and turned to 
account on schedules of time, speed, and intensity which are contin¬ 
ually sought to be reduced to a more precise measurement and a more 
sweeping uniformity. 

The like is true of the finished products. Modern consumers in 
great part supply their wants with commodities that conform to certain 
staple specifications of size, weight, and grade. The consumer (that 

1 Adapted with permission from Thorstein Veblen, The Theory of Business 
Enterprise , pp. 8-14. (Charles Scribner’s Sons, 1904.) 


120 


THE WORKER IN MODERN ECONOMIC SOCIETY 


is to say the vulgar consumer) furnishes his house, his table, and his 
person with supplies of standard weight and measure, and he can to 
an appreciable degree specify his needs and his consumption in the 
notation of the standard gauge. As regards the mass of civilized man¬ 
kind, the idiosyncrasies of the individual consumers are required to 
conform to the uniform gradations imposed upon consumable goods 
by the comprehensive mechanical processes of industry. “ Local 
color,” it is said, is falling into abeyance in modern life, and where it 
is still found it tends to assert itself in units of the standard gauge. 

For the population of the towns and cities, at least, much the same 
rule holds true of the distribution of consumable goods. So, also, 
amusements and diversions, much of the current amenities of life, are 
organized into a more or less sweeping process to which those who 
would benefit by the advantages offered must adapt their schedule 
of wants and the disposition of their time and effort. The frequency, 
duration, intensity, grade, and sequence are not, in the main, matters 
for the free discretion of the individuals who participate. Throughout 
the scheme of life of that portion of mankind that clusters about the 
centers of modern culture the industrial process makes itself felt and 
enforces a degree of conformity to the canon of accurate quantitative 
measurement. There comes to prevail a degree of standardization 
and precise mechanical adjustment of the details of everyday life, 
which presumes a facile and unbroken working of all those processes 
that minister to these standardized human wants. 

b) THE INFLUENCE OF MECHANICAL COMMUNICATION 1 

The changes that have taken place since the beginning of the 
nineteenth century are such as to constitute a new epoch in com¬ 
munication, and in the whole system of society. If one were to 
analyze the mechanism of intercourse, he might, perhaps, distinguish 
four factors that mainly contribute to its efficiency, namely: expres¬ 
siveness, or the range of ideas and feelings it is competent to carry; 
permanence of record, or the overcoming of time; swiftness, or the 
overcoming of space; diffusion, or access to all classes of men. 

In the United States, for instance, at the close of the eighteenth 
century, public consciousness of any active kind was confined to small 
localities. Travel was slow, uncomfortable and costly, and people 
undertaking a considerable journey often made the'r wills beforehand. 

1 Adapted with permission from Charles Horton Cooley, Social Organization , 
pp. 80-83. (Charles Scribner’s Sons, 1919.) 


THE WORKER AND THE COMING OF CAPITALISM 


I 2 1 


The newspapers, appearing weekly in the larger towns, were entirely 
lacking in what we should call news; and the number of letters sent 
during a year in all the thirteen states was much less than that now 
handled by the New York office in a single day. People are far more 
alive today to what is going on in China, if it happens to interest 
them, than they were then to events a hundred miles away. The 
isolation of even large towns from the rest of the world, and the conse¬ 
quent introversion of men’s minds upon local concerns, was something 
we can hardly conceive. In the country “the environment of the 
farm was the neighborhood; the environment of the village was the 
encircling farms and the local tradition; .... few conventions 
assembled for discussion and common action; educational centers did 
not radiate the shock of a new intellectual life to every hamlet; federa¬ 
tions and unions did not bind men, near and remote, into that fellow¬ 
ship that makes one composite type of many human sorts. It was an 
age of sects, intolerant from lack of acquaintance.” 

The change to the present regime of railroads, telegraphs, daily 
papers, telephones and the rest has involved a revolution in every 
phase of life; in commerce, in politics, in education, even in mere 
sociability and gossip—this revolution always consisting in an enlarge¬ 
ment and quickening of the kind of life in question. 

See also Selection 4, chapter vi: Transportation and Communica¬ 
tion in America. 

7. THE CHANGE IN THE LIFE OF THE OPERATIVE 

a) THE HAND-LOOM WEAVER 1 

The lot of the hand-loom weaver was not an unpleasant one 
throughout most of the eighteenth century. Certainly his food was 
simple, and included little meat—in fact it was a diet which would be 
regarded as miserably inadequate by any artisan of today—his 
clothing was coarse and he worked hard; but his life was not without 
variety, and it could be spent in the country and fresh air. Guest 
says of the weavers that they were a fine body of men, full of the 
spirit of self-reliance. This he attributed to the fact that they sold 
their cloth and not their labour, that they were not servants but 
independent business men; and, further, to the facility with which 
they changed their employers, to “the constant effort to find out and 

1 Adapted with permission from S. J. Chapman, The Lancashire Cotton Industry, 
pp. 36-38, 39-41, 45-47, 74 - 77 , 81-82. (Manchester University Press, 1904.) 



122 


THE WORKER IN MODERN ECONOMIC SOCIETY 


obtain the largest remuneration for their labour, the incitement to 
ingenuity which the higher wages for fine manufactures and skilful 
workmanship produced, and a conviction that they depended mainly 
on their own exertions.” 

Undoubtedly at certain periods in the second half of the eighteenth 
century many weavers were in more flourishing circumstances than 
they had ever been before. The inventions of the jenny, mule and 
water-frame, together with the cylinder-carder and the warping-mill, 
greatly lowered the cost of warps and weft. The mule yarns, which 
were finer than any cotton yams previously produced in this country, 
were made up into delicate fabrics, muslins and light goods. These 
became extremely popular and entered into competition with such 
Eastern textiles as were still imported for consumption in spite of 
the heavy duties by which they were discouraged. 

The intense demand for hands to work up cotton caused a marked 
contraction of the woollen and linen industries in Lancashire, “while 
the old loom-shops being insufficient, every lumber-room, even old 
bams, cart-houses and out-buildings of any description were repaired, 
windows broke through the blank walls, and all were fitted up for 
loom-shops. This source of making room being at length exhausted, 
new weavers’ cottages with loom-shops rose up in every direction.” 
The period, from 1788 to about the end of the century, was indeed 
“the golden age of this great trade,” and it was a golden age for the 
operatives. 

Such were the circumstances of the fine workers; but at the same 
time the trade of coarse weaving was steadily becoming worse, to some 
extent in all probability because the popularity of fine goods lessened 
the demand for coarse goods, to some extent because those who 
failed at the more delicate work fell back on the heavier as a last 
resource, and to some extent because coarse weaving was an accom¬ 
plishment requiring no special skill which could be easily and rapidly 
learnt. 

The distress of the coarse weavers, apparent even before the nine¬ 
teenth century began, proved to be but the beginning of a depression 
which was ultimately to drive the trade of hand-loom weaving out 
of existence. From 1785 to 1806, reported the Commissioner for 
Scotland, hand-loom weaving was a prosperous trade; about 1793, 
however, it began to decline; after 1816 it collapsed completely. In 
1835 the Committee appointed to consider the condition of the hand- 
loom weavers was offered a description written by one of its members, 


THE WORKER AND THE COMING OF CAPITALISM 


123 


an employer, the famous champion of the factory workers, John 
Fielden, in which the situation of the weavers was represented as 
appalling; and although the author was warmly in sympathy with 
the operatives, and keenly desirous of carrying his Bill enforcing a 
minimum wage, his statements certainly did not exaggerate the state 
of affairs among large classes of workers. 

The causes for the collapse of hand-loom weaving must have con¬ 
sisted in forces tending to diminish relatively the demand for hand- 
loom weavers or relatively to increase their supply; and both sets of 
influences were at work. The power-loom diminished the demand for 
hand-loom weavers. But it was introduced very gradually, and for 
a long time a single operative could not manage more than one or two 
power-looms; and, as the economies of the new method of manufacture 
developed, falling prices necessitated an enlarged output. Apart, 
then, from the attitude of labour, the power-loom need not have 
occasioned the intensity of distress with which its appearance was 
associated. Only the direst necessity, however, could drive the 
typical hand-loom weaver into a steam-factory, and not infrequently 
he preferred to fight famine at close quarters rather than surrender 
his liberty. The effect of every new steam-loom, therefore, was to 
diminish the demand for skilled craftsmen. Most hand-loom weavers 
competed with the factory, instead of entering it and attempting to 
secure for themselves as large a share as possible of the gain resulting 
from new economies in production. Moreover the supply of hand- 
loom weavers tended to increase. Labour was being driven from a 
partial dependence on the land; the restrictive measures of trade 
societies were preventing an adequate absorption of the rising genera¬ 
tion in certain callings, and the weavers themselves proved far too 
weak to maintain such barriers around their own trade; moreover 
some kinds of weaving were very easily learnt after improvements in 
the loom had rendered the work upon it simple and mechanical. 
Weaving, therefore, became the natural resource of many who were 
unemployed, for instance, discharged soldiers, of whom a great number 
“exchanged the musket for the shuttle” after the peace of 1815. 

Whether machinery need have occasioned any long-sustained 
damage to the condition of the weavers or not is open to question. 
It is highly probable that the slowness with which machinery developed 
and won its way would have prevented any shock from being felt had 
labour followed whither invention led, and that growth of the industry 
would have kept up the demand for labour except for very short 


124 


THE WORKER IN MODERN ECONOMIC SOCIETY 


intervals. However, the change to the factory system having involved 
striking transformations, it is vain to imagine that domestic workers 
might have acted differently. Whatever the effect of machinery 
might have been, the fact stares us in the face that the attitude of 
the operatives towards it was at all times antagonistic, and that the 
antagonism, if it died down, did not die out completely. 

The persistent opposition of the working classes and many others 
to mechanical improvements is traceable to fears as to their effect 
upon the demand for labour. There were those who thought that 
labour would be absolutely dispensed with, for invention might be 
carried so far as to supersede manual labour entirely; there were 
others who believed that while machinery might be valuable under a 
co-operative system, under other circumstances it could only add to 
the tyranny of capital and depress wages, for the introduction of 
machinery would cause some displacement of labour and the dis¬ 
carded workers by competing against those in employment would 
reduce earnings; there were some, perhaps, who perceived merely the 
temporary evil of the readjustment of labour, and the waste involved 
in discarding appliances rendered antiquated before they were old, 
and who desired more gradual changes. 

b) THE NEW INDUSTRIAL TOWN OF THE EARLY NINETEENTH 

CENTURY 1 

The old English towns were often overcrowded, insanitary, honey¬ 
combed with alleys and courts that never saw the sun or breathed the 
air, but the fancy, and emotion, and the skill and craftsmanship of 
different ages, had made them beautiful and interesting. They were 
the home of a race, with all the traditions and pieties and heirlooms 
of a home. 

Perhaps the best way to describe the new towns and their form 
of government would be to say that so far from breaking or checking 
the power of circumstances over men’s lives, they symbolised the 
absolute dependence and helplessness of the mass of the people living 
in them. They were not so much towns as barracks: not the refuge 
of a civilisation but the barracks of an industry. This character was 
stamped on their form and life and government. The mediaeval 
town had reflected the minds of centuries and the subtle associations 
of a living society with a history; these towns reflected the violent 

1 Adapted with permission from J. L. and Barbara Hammond, The Town 
Laborer , pp. 38-41, 46, 53-55, 59. (Longmans, Green & Co., 1917.) 


THE WORKER AND THE COMING OF CAPITALISM 


125 


enterprise of an hour, the single passion that had thrown street on 
street in a frantic monotony of disorder. Nobody could read in these 
shapeless improvisations what Ruskin called “ the manly language of 
a people inspired by resolute and common purpose,” for they repre¬ 
sented nothing but the avarice of the jerry-builder catering for the 
avarice of the capitalist. It would be as reasonable to examine the 
form and structure of an Italian ergastulum, in order to learn the wishes 
and the character of the slaves that worked in it. Nobody could find 
a spell of beauty or romance to supply the pieties of the old city, or to 
kindle a civic spirit in the great tide of human life that poured 
in from the villages that had lost their commons or the distant 
towns that had lost their trade. Their towns were as ugly as their 
industries, with an ugliness in both cases that was a symptom of 
work and life in which men and women could find no happiness or 
self-expression. 

The extreme type of this organisation was the mining village. Life 
in such a town brought no alleviation of the tyranny of the industrial 
system; it only made it more real and sombre to the mind. There 
was no change of scene or colour, no delight of form or design to break 
its brooding atmosphere. The men and women who left the mill 
and passed along the streets to their homes did not become less but 
more conscious of that system as a universal burden, for the town was 
so constructed and so governed as to enforce rather than modify, to 
reiterate rather than soften the impressions of an alien and unaccom¬ 
modating power. The town was as little their own as the mill. For 
the working classes had no more control over their own affairs outside 
than inside the factory. The weaver of Burnley or the spinner of 
Rochdale had less to remind him that he counted in the life of a 
society than his grandfather who had helped to administer the 
little affairs of the village and to regulate the use of its common 
pastures. 

Englishmen thought of their great towns not with hope, or pride, 
or ambition, but with a haunting fear, reminding themselves not 
of the light that might be diffused, but of the darkness that overspread 
them. The real difficulty was that most of the upper classes, though 
they were afraid of the darkness, were still more afraid of the light. 
Place wrote in 1832, the Whigs being then in office: “Ministers and 
men in power, with nearly the whole body of those who are rich, dread 
the consequences of teaching the people more than they dread the 
effect of their ignorance.” 


126 


THE WORKER IN MODERN ECONOMIC SOCIETY 


C. The Worker and the New Commercial Organization 
8. THE COMMERCIAL REVOLUTION AND POPULATION 

a) THE DRIFT TO THE TOWNS 1 

The growth of towns was originally due to the industrial revolu¬ 
tion. Manufacturers set up works on the coal and iron areas to obtain 
cheap power or raw material; the “hands” followed to get work. 
People also massed in the ports to deal with the growing quantities 
of exports and imports. The growth of towns corresponded in every 
country to the development of coal mining, factories, and engineering 
works. This tendency was, however, considerably accelerated and 
stimulated by the development of railways, not merely because 
people had increased facilities for moving into towns, but because the 
railways enabled towns to be fed. 

The excellent railway facilities to and from towns encourage 
factory owners to set up in urban rather than rural areas. They 
can make sure of getting fuel, the distribution of which is already 
organized for household purposes; they are near the market for 
finished goods in the shape of merchants who will attend to the sales, 
and with the railway facilities they can draw on several lines for the 
conveyance of raw material or the despatch of finished goods. Apart 
altogether from transport, manufacturers tend to set up in towns 
because they can get hands there readily without the necessity of 
providing for their housing as they would have to do in a rural area. 

The growth of towns seems to have been specially rapid in the 
United States where competitive railway companies try to induce 
manufacturers to use their particular line. Manufacturers are natu¬ 
rally attracted to these competitive facilities when setting up new 
businesses. In their turn the operatives gather round the factories 
and towns increase in size. 

“The entire net increase of the population of 1870 to 1890 in 
Illinois, Wisconsin, Iowa and Minnesota was in cities and towns 
possessing competitive rates, while those having non-competitive 
rates decreased in population and in Iowa it is the general belief that 
the absence of large cities is due to the earlier policy of the railways 
giving Chicago discriminating rates.” 

The following table, taken from Weber, shows the increasing 
proportion of the population dwelling in cities of over 10,000. Up to 

1 Adapted with permission from L. C. A. Knowles, The Industrial and Com¬ 
mercial Revolutions in Great Britain during the Nineteenth Century , pp. 216-19. 
(E. P. Dutton & Co., 1921.) 


THE WORKER AND THE COMING OF CAPITALISM 


127 


1851, the growth may be ascribed to the industrial changes; after 
1851 it is largely the result of transport which, in its turn, as we have 
seen, increased the impetus to the spread of the industrial revolution. 


TABLE I 

Percentage of Population in Cities of Over 10,000 


Country 

1800 

1850 

1890 

England and Wales. 

(1801) 21.30 
17.0 

(1816) 7.25; 

(1800) 3.8 

(1801) 9.5 

(1820) 3.7 

(1851) 39.45 
(1851) 32.2 
(1849) 10.63 
(1850) 12.0 
(1851) 14.4 
(1856) 5.3 

(1891) 61.73 

49-9 
(1890) 30.0 
27.6 
25-9 
9-3 

Scotland. 

Prussia. 

U.S.A. 

France. 

Russia. 



TABLE II 

Percentage of Total Population Dwelling in Cities 

of Over 100,000 


Country 

1851 

» 

1891 

England and Wales. 

22.58 
16.9 
(1849) 3 • 1 

(1850) 6.0 

(1851) 4.6 

(1856) 1.6 

31.82 

29.8 

12.9 
15-5 
12.0 

(1885) 3.2 

Scotland. 

Prussia. 

U.S.A. 

France. 

Russia. 



Railways and factories do not wholly account for the growth 
of towns in the nineteenth century. People were gathered into towns, 
not merely by the increased opportunities for employment which 
towns afforded, but by the attraction of town life and the excitement of 
living in the mass. The new transport facilities enabled them to 
find out in many cases how much they preferred town to country 
life by the trips and excursions which familiarized the rural population 
with urban conditions. 

b) SHIFTS IN OCCUPATIONAL GROUPS 1 

The most valuable source of information regarding the effects of 
modern industrialism is the study of the comparative statistics of 
occupations. Like every statistical inquiry, this is full of pitfalls. 
But while errors invalidate many particular conclusions as to the 
nature and size of fluctuations, they do not affect to anything like the 

1 Adapted with permission from John A. Hobson, The Evolution of Modern 
Capitalism, pp. 383 and 449. (Charles Scribner’s Sons, 1912.) 
































128 


THE WORKER IN MODERN ECONOMIC SOCIETY 


same degree the broader judgments based upon a large mass of cu¬ 
mulative statistical evidence. 

The summary tables of occupations in the last five censuses for 
England and Wales give the following enumeration of the employed 
population under general heads: 


TABLE III 

England and Wales—Summary Tables of Occupations 



1861 

1871 

1881 

1891 

1901 

I. Professional Class 

48 i ,957 

684,102 

647,075 

926,132 

972,685 

II. Domestic. 

1,367,782 

1,633,514 

1,803,81c 

1,900,328 

i, 994 , 9 i 7 

1,858,454 

HI. Commercial. 

623,710 

815,424 

980,128 

1 , 399,735 

IV. Agricultural and 
Fishing. 

2,010,454 

4,828,399 

1,657,138 

1,383,184 

1,336,045 

iD 52,495 

V. Industrial. 

5 , 137,725 

6 , 373 , 3 67 

7 , 336,344 

8,350,176 

Total Occupied... 

9,312,302 
20,066,224 

9,927,903 

11,187,564 

12,899,484 

14,328,727 

Total Population. 

22,712,266 

25 , 974,439 

29,002,325 

32,527,843 

Percentage In¬ 

crease of popu¬ 
lation since last 
census. 

11.90 

13.21 

14-36 

11.65 

12.17 


The accompanying table indicates the rise or decline in the relative 
importance of the general classes of occupations of males during the 
decennium 1901-1911. 

TABLE IV 
Male Occupations 


(Males per 10,000 over 10 years, England and Wales) 


Classes 

1901 

1911 

Classes 

1901 

1911 

I. General or Local Gov¬ 
ernment . 

II. Defence. 

III. Professions. 

IV. Domestic: 

Outdoor. 

Domestic: 

Indoor, etc. 

V. Commercial: 

a) Merchants, Agents, 

Banking, etc. 

b ) Clerks. 

VI. Conveyance: 

a) Rail. 

141 

i 39 

257 

148 

102 

184 

254 

290 

355 

167 

594 
121 

179 

151 

269 

166 

118 

222 

264 

291 

345 

153 

558 

124 

VIII. Mining: 

Coal. 

Others......... 

IX. Metals: 

Machines. 

Ships. 

Vehicles. 

X. Building. 

XI. Wood. 

XII. Paper, Print. 

XIII. Textiles. 

XIV. Dress. 

XV. Food, etc. 

528 

no 

814 

7 i 

95 

859 

169 

123 

33 i 

305 

638 

647 

92 

846 

76 

128 

693 

158 

131 

343 

275 

669 

b) Road. 




VII. Agriculture: 

Farmers. 







Farm-workers. 




Others. 












































































THE WORKER AND THE COMING OF CAPITALISM 


I2 9 


In most modem countries, then, the statistics of occupations point 
to certain common tendencies: 

1. A relative decline in the importance of agriculture: a rapid 
positive decline in free-trade England with its earlier development of 
capitalistic industry and its dense population, a considerable relative 
decline in each of the other countries, irrespective of tariff policy, 
density of population, land tenure or manufacturing development. 
Agricultural protection, combined with a large retention of small 
land-owners as in France and Germany, the possession of a large 
export trade in agricultural produce, as in the United States, retard, 
but do not cancel, the operation of the tendency. 

2. An abnormally rapid growth of the transport and distributive 
trades (wholesale and retail' with the building, car-making, electric, 
and other manufacturing industries subsidiary to transport and 
distribution. 

3. Wherever large deposits of coal and iron exist a great develop¬ 
ment of employment in mines. 

4. A relative decline of the staple or fundamental manufacturing 
industries, especially the textile and dressmaking, as compared with 
the manufactures of final commodities for consumption. Luxury 
trades, or trades subsidiary to the arts and professions, present an 
increasing proportion of occupation. 

5. In almost every instance a large, rapid increase in the propor¬ 
tion of the occupied population engaged in public services, professions, 
and other branches of non-material production. 

6. An increase in the proportion of the retired or unoccupied 

classes. _ 

See also Selection 4. b, c, and d: The Machine and Population; 
and Section D. chapter vi: .American Occupational Groups. 

9. THE NEW CAPITALISM 

a) THE MEANING 01 AN INTERNATIONAL MARKET 1 

The power to become habituated to his surroundings is a marked 
characteristic of mankind. Very few of us realize with conviction 
the intensely unusual, unstable, complicated, unreliable, temporary 

1 Adapted with permission from J. Maynard Keynes. Economic Consequences 
of the Peace , pp. 3, 5, 9-^5. (Harcourt. Brace & Howe. 1920.) Lack of space pre¬ 
vents our including here the whole of Mr. Keynes's brilliant analysis of Western 
civilization. We believe, however, that our deletions have done no injustice to 
his essential argument.— Ed. 








130 


THE WORKER IN MODERN ECONOMIC SOCIETY 


nature of the economic organization by which Western Europe has 
lived for the last half-century. 

Before 1870 different parts of the small continent of Europe had 
specialized in their own products; but, taken as a whole, it was sub¬ 
stantially self-subsistent. And its population was adjusted to this 
state of affairs. 

After 1870 there was developed on a large scale an unprecedented 
situation, and the economic condition of Europe became during the 
next fifty years unstable and peculiar. The pressure of population 
on food, which had already been balanced by the accessibility of 
supplies from America, became for the first time in recorded history 
definitely reversed. As numbers increased, food was actually easier 
to secure. Larger proportional returns from an increasing scale of 
production became true of agriculture as well as industry. With the 
growth of the European population there were more emigrants on 
the one hand to till the soil of the new countries, and, on the other, 
more workmen were available in Europe to prepare the industrial 
products and capital goods which were to maintain the emigrant pop¬ 
ulations in their new homes, and to build the railways and ships which 
were to make accessible to Europe food and raw products from distant 
sources. Up to about 1900 a unit of labor applied to industry yielded 
year by year a purchasing power over an increasing quantity of food. 
It is possible that about the year 1900 this process began to be reversed, 
and a diminishing yield of Nature to man’s effort was beginning to 
reassert itself. But the tendency of cereals to rise in real cost was 
balanced by other improvements; and—one of many novelties—the 
resources of tropical Africa then for the first time came into large 
employ. 

Europe was so organized socially and economically as to secure 
the maximum accumulation of capital. While there was some con¬ 
tinuous improvement in the daily conditions of life of the mass of the 
population, Society was so framed as to throw a great part of the 
increased income into the control of the class least likely to consume 
it. The new rich of the nineteenth century were not brought up to 
large expenditures, and preferred the power which investment gave 
them to the pleasures of immediate consumption. 

The immense accumulations of fixed capital which, to the great 
benefit of mankind, were built up during the half century before the 
war, could never have come about in a Society where wealth was 
divided equitably. The railways of the world, which that age built 


THE WORKER AND THE COMING OF CAPITALISM 131 

as a monument to posterity, were, not less than the Pyramids of Egypt, 
the work of labor which was not free to consume in immediate enjoy¬ 
ment the full equivalent of its efforts. 

Thus this remarkable system depended for its growth on a double 
bluff or deception. On the one hand the laboring classes accepted 
from ignorance or powerlessness, or were compelled, persuaded, or 
cajoled by custom, convention, authority, and the well-established 
order of Society into accepting a situation in which they could call 
their own very little of the cake that they and Nature and the capital¬ 
ists were co-operating to produce. And on the other hand the capital¬ 
ist classes were allowed to call the best part of the cake theirs and 
were theoretically free to consume it, on the tacit underlying condi¬ 
tion that they consumed very little of it in practice. The duty of 
“saving” became nine-tenths of virtue and the growth of the cake 
the object of true religion. There grew round the non-consumption 
of the cake all those instincts of puritanism which in other ages has 
withdrawn itself from the world and has neglected the arts of produc¬ 
tion as well as those of enjoyment. And so the cake increased; but, 
to what end was not clearly contemplated. Individuals would be 
exhorted not so much to abstain as to defer, and to cultivate the 
pleasures of security and anticipation. Saving was for old age or for 
your children; but this was only in theory—the virtue of the cake 
was that it was never to be consumed, neither by you nor by your 
children after you. 

The relation of the Old World to the New .—The accumulative habits 
of Europe before the war were the necessary condition of the greatest 
of the external factors which maintained the European equipoise. 

Of the surplus capital goods accumulated by Europe a substantial 
part was exported abroad, where its investment made possible the 
development of the new resources of food, materials, and transport, 
and at the same time enabled the Old World to stake out a claim in 
the natural wealth and virgin potentialities of the New. Thus the 
whole of the European races tended to benefit alike from the develop¬ 
ment of new resources whether they pursued their culture at home or 
adventured it abroad. 

Even before the war, however, the equilibrium thus established 
between old civilizations and new resources was being threatened. 
The prosperity of Europe was based on the facts that, owing to the 
large exportable surplus of foodstuffs in America, she was able to 
purchase food at a cheap rate measured in terms of the labor required 


132 THE WORKER IN MODERN ECONOMIC SOCIETY 

to produce her own exports, and that, as a result of her previous invest¬ 
ments of capital, she was entitled to a substantial amount annually 
without any payment in return at all. The second of these factors 
then seemed out of danger, but, as a result of the growth of population 
overseas, chiefly in the United States, the first was not so secure. 

When first the virgin soils of America came into bearing, the pro¬ 
portions of the population of those continents themselves, and con¬ 
sequently of their own local requirements, to those of Europe were 
very small. As lately as 1890 Europe had a population three times 
that of North and South America added together. But by 1914 
the domestic requirements of the United States for wheat were 
approaching their production and the date was evidently near when 
there would be an exportable surplus only in years of exceptionally 
favorable harvest. Indeed, the present domestic requirements of 
the United States are estimated at more than 90 per cent of the 
average yield of the five years 1909-1913. At that time, however, 
the tendency towards stringency was showing itself, not so much in 
a lack of abundance as in a steady increase of real cost. That is to 
say, taking the world as a whole, there was no deficiency of wheat, 
but in order to call forth an adequate supply it was necessary to 
offer a higher real price. The most favorable factor in the situation 
was to be found in the extent to which Central and Western Europe 
was being fed from the exportable surplus of Russia and Roumania. 

In short, Europe’s claim on the resources of the New World was 
becoming precarious; the law of diminishing returns was at last 
reasserting itself, and was making it necessary year by year for Europe 
to offer a greater quantity of other commodities to obtain the same 
amount of bread; and Europe, therefore, could by no means afford 
the disorganization of any of her principal sources of supply. 

b) WANTED—A NEW TERMINOLOGY 1 

When we abuse or defend “Capitalism,” or talk about the con¬ 
flict between “Capital’Land “Labor,” we use these terms loosely, 
without reflecting upon the change which has come over their signifi¬ 
cance with the progressive change in the organization of industry. 
In the phrase “Capital and Labor,” “Capital” stands vaguely for the 
master-class, for those who direct the processes of industry. Their 
power is assumed to be derived from the ownership or control of the 

1 Taken with permission from Ramsay Muir, “A Definition of Capital,” 
The Nation and the Athenaeum , September 10, 1921, pp. 822-23. (Eveleigh Nash & 
Grayson, Ltd., Publishers.) 


THE WORKER AND THE COMING OF CAPITALISM 


133 


capital (in the strict sense of the term) by means of which industry 
is carried on. Yet many of the real directors of industry own very 
little of the capital which they use, and most of the owners of capital 
have little or no effective voice in the direction of industry. The 
indiscriminate use of the term “capital” to describe the controlling 
factors in modem industry is, in these circumstances, misleading and 
productive of loose thinking. We have, in truth, inherited this 
terminology from a period when it was not an inexact description of 
the facts. But the facts have altered; and the first step towards 
clear thinking, and therefore towards rational policy, is the use of a 
more precise terminology which will represent the altered facts. 

In the early days of modern industrial enterprise the term “capital¬ 
ist” was a perfectly clear and unambiguous term. The entrepreneur 
of a concern did himself provide the capital required; he decided how 
it was to be used; he was liable for all the obligations which his firm 
undertook, whether towards workpeople or towards customers; every 
penny he possessed lay under this liability, and if he failed in his 
obligations he might not only be made penniless, but he might lose 
his liberty and be imprisoned indefinitely; his wife’s fortune equally 
came under the same liability. Faced by such enormous risks, and 
being himself the effective initiator and director of all his firm’s 
undertakings, he might reasonably claim that he must not be inter¬ 
fered with, and that all the profits earned by his enterprise legitimately 
belonged to him. He worked for his money, and he took immense 
risks; his employees were faced by no such responsibilities. 

Over a part—a small and a diminishing part—of the field of 
industry these conditions still exist, and where they exist “capitalism” 
in its original sense still survives. It is true that the extremer penal¬ 
ties for failure imposed by the old system have been abolished, first 
by the Bankruptcy Acts, which have withdrawn the worst terrors 
from insolvency; and secondly, by the Married Women’s Property 
Acts, which have provided the capitalist entrepreneur with a means of 
safeguarding his position should his enterprises fail. But still the 
partners in a private firm are liable in all their personal belongings 
for the obligations of the firm, are solely responsible for the character 
and direction of its operations, and can therefore reasonably claim 
that when they have fulfilled all the conditions laid down by law, and 
when they have paid the salaries and wages for which they have con¬ 
tracted, the whole residuum belongs to them—subject always to the 
right of the State to take toll of it by taxation. 


134 


THE WORKER IN MODERN ECONOMIC SOCIETY 


But it is estimated that only about 5 per cent of our industry is 
carried on upon this basis of pure capitalism. The other 95 per cent 
is conducted by limited liability companies; and the introduction of 
the principle of limited liability has transformed the whole situation. 

The cause of this change was that, as the scale of industry 
increased, it became impossible for an individual entrepreneur , or a 
small group of effective partners, to find the capital required. The 
railways, for example, could never have been constructed on a pure 
capitalist basis, in which the actual owners of the capital were the 
real managers of the concern. It was indispensable that the range 
from which industrial capital was drawn should be extended. The 
only way of doing this was to draw in a very large number of “ sleep¬ 
ing partners,” who could contribute capital, but who could not, in 
the nature of things, take any effective part in the conduct of the 
concern. But as these “sleeping partners” would legally be liable in 
all that they possessed for obligations in regard to which they could 
not be consulted, this was felt to be a dangerous device. 

The difficulty was got over by the adoption of the system of limited 
liability—with a good deal of hesitation in 1837, but fully and com¬ 
pletely in the Companies Act of 1862. These Acts permitted the 
formation of companies in which the investor’s risk was limited to the 
actual amount of the shares for which he subscribed. The result was 
an immense and rapid replacement of private, or strictly “capitalist,” 
firms by limited companies; and as every other country has adopted 
similar devices, the limited liability company has become the char¬ 
acteristic mode of organization for modem industry. The private 
or strictly “capitalist” firm survives only for small concerns in which 
the personal control of the enterpreneur is all-important; and many 
even of these have adopted the form of a limited liability company 
for the purpose of minimizing the risks of loss. 

Now the introduction and growth of the limited liability system 
has involved a complete transformation of the conditions of industry; 
and when we talk vaguely about “capitalism,” we leave too much 
out of account the magnitude and significance of this change. 

In the first place, it has immeasurably widened the range of inter¬ 
est and participation in industrial operations. The capital required 
for industry is provided by the savings of an immense number of 
people, and if the owners of the capital are to be regarded as the owners 
of the industry, it has at least become true that every great industrial 
concern is “owned” by a large section of the community. In the 


THE WORKER AND THE COMING OF CAPITALISM 


T 35 


railways, for example, the shareholders are actually more numerous 
than the employees. And the number of those who are thus inter¬ 
ested not only can, but does, increase every year. 

In the second place, the change has brought about a sharp differ¬ 
entiation between two classes of people—those who direct great 
industrial concerns, and those who provide them with capital. And 
neither class corresponds to the “capitalists” of an earlier time, who 
both directed the concern and provided its capital. It is true that 
the directors always hold some capital. But often enough they hold 
comparatively little; and their importance is derived from their 
directive work, not from the capital they supply. It is true, also, 
that the shareholders nominally elect the directors, who are nominally 
their servants. But everybody knows that this element of control 
by the shareholders is in the last degree unreal except on rare occasions 
when the company is on the rocks. How many of the innumerable 
shareholders of the Midland Railway or the Lever Brothers ever 
attend their meetings ? What element of free election is there in the 
process by which directors—and, still more, general managers—are 
appointed ? The real and practically unqualified control lies with the 
directors; and the influence of the shareholders is only felt in a pressure 
for good dividends. A modern development of the limited company 
still further emphasizes this fact. A steadily increasing proportion 
of invested capital takes the form of preference shares, bearing a 
limited dividend; and the holders of these shares are commonly 
deprived of voting rights. It is not capital which controls industry, 
it is expert direction—acting, no doubt, in the interests of capital,* 
but acting with very great freedom. 

Yet we still continue to employ a terminology which confuses 
these two perfectly distinct factors in one. When we talk about 
“capitalists,” which do we mean—the more or less expert working 
directors of the concern, or its “sleeping partners” with limited 
liability? Those who denounce “capitalism” are sometimes think¬ 
ing of the autocratic power wielded by the directors, and are indignant 
(a) because this power is used to produce profits; or ( b ) because the 
directors do not share their power with the workers in the concern. 
But as often they are thinking of the quite different position of the 
shareholders, who receive dividends though “ they toil not, neither do 
they spin.” Is it the captain of industry, or is it the rentier , who is 
aimed at by these critics ? They are quite different people, though 
they are merged in the single word “capitalist.” And the director 



136 THE WORKER IN MODERN ECONOMIC SOCIETY 


(often a hard working and always an indispensable man) is condemned 
as an idle tribute-receiver because he is identified with the rentier , 
while the rentier is denounced as a tyrant because he is confused with 
the director. In truth, both classes are indispensable; both, in some 
form, would reappear even in the Socialist State; and in regard to 
the position of each, abuses are possible, and reforms are desirable. 
But we shall not see clearly along wha.t lines reform should proceed 
until we distinguish between them quite clearly, and get away from 
the lax terminology, dictated by a condition of things now almost 
vanished, which lumps them both under the vague term “capitalist.” 

D. The Change in Social Ideas 

In the preceding sections of this chapter the primary emphasis 
has been upon changes in industrial organization and technique. 
It must not be forgotten, however, that accompanying or following 
these there have been changes in social and political thought of 
equal importance as evidence in a survey of the human aspects of 
industry. These changes in thought have been, of course, largely 
the outgrowth of the changed material conditions in which men 
found themselves. In turn, however, ideas have profoundly influenced 
industrial organization itself, and, equally important for the present pur¬ 
pose, they have modified current notions as to political policy toward 
industry. Except for convenience, indeed, the two cannot be separated. 

Necessarily only the barest hint of the historical trend of political 
and social thinking can be given here, only enough to suggest that 
,such changes have actually taken place. Some mention has already 
been made of the general character of medieval economic thought 
(Selection 5 in chapter iv). The brief citations given below deal 
with the period from the beginning of the industrial revolution 
(1750) to the present day. For a more adequate conception of the 
development of modern political and social theory the student is 
referred to the list of references for further reading given at the end 
of this chapter, and to later parts of this book, particularly Parts 
Five and Seven. 

10. THE REIGN OF LAISSEZ FAIRE 1 

Adam Smith, releasing economics from the old mercantilist super¬ 
stitions, set the whole world in a new light, displaying trade as an 
elaborate and varied life of mutual service, a system in which men and 

1 Adapted with permission from J. L. and Barbara Hammond, The Town Laborer , 
pp. 195-219. (Longmans, Green & Co., London, 1919.) 


THE WORKER AND THE COMING OF CAPITALISM 


137 


nations were not all engaged in snatching advantages from each other, 
but were unconsciously helping and developing each other. He 
examined all the restrictions and regulations by which nations had tried 
to increase their prosperity at the expense of the rest of mankind, and 
governments had tried to direct the operations of traders and capital¬ 
ists, and argued that they had done harm rather than good to the 
peoples who thought they were benefiting by them, because they 
interfered with “the obvious and simple system of natural liberty.” 
The upper classes took that phrase from Adam Smith, and applied it 
to the relations of capital and labour, but it was rarely and only after 
a long interval that they applied it to anything else. 

This first discovery, that the State could not really protect the 
workman, was followed by another, even more interesting, that the 
employer could not really injure him. The workmen were in the 
hands of a power that was obliged by the law of its being to secure 
them all the comfort and freedom of which they were capable. 

This doctrine was supplemented by another that turned the key 
more effectually still on the labourers’ position. This third stage is 
associated with the name of Mai thus. At the end of the century the 
belief took root among the governing class that the recompense of 
labour was fixed by natural laws, and that no human efforts could 
really alter it. Any struggle against this decree of nature would 
.cause trouble and disorganisation, and in that way would inflict 
injury on the labourers themselves, but it could not increase their 
share in the national wealth. That share must always remain some¬ 
where about the level of subsistence. This belief was introduced by 
the Physiocrats, who had their eyes on the peasant of eighteenth- 
century France. As Turgot put it, “In every sort of occupation it 
must come to pass that the wages of the artisan are limited to that 
which is necessary to procure him his subsistence. II ne gagne que sa 
vie.” If this doctrine were true the only changes in real wages would 
be those consequent on changes of diet; if labourers took to living on 
cheaper food their wages would go down, if on dearer they would go 
up. It was the appreciation of this fact that set Malthus in opposition 
to Eden and all the other food reformers who wanted to simplify the 
labourer’s meagre diet still further. Now, during the last phase of 
the ancient regime, this Physiocrat idea became naturalised in Eng¬ 
land. Both Malthus and Ricardo contributed to this result. 

Malthus, who started in revolt against the optimism which believed 
in the beneficence of nature, laid down a principle of population which, 


138 THE WORKER IN MODERN ECONOMIC SOCIETY 


by explaining poverty, robbed it of its horrors for the rich. Popula¬ 
tion, he argued, tends to multiply faster than subsistence. Poverty 
is therefore inevitable, and unless mankind deliberately sets itself to 
check the increase of the race, vice and misery are the only means by 
which population and food can be adjusted to each other. This is, 
of course, a very general sketch of his teaching, and if we were dis¬ 
cussing Malthus himself we should be obliged to qualify this summary 
by noting a number of important considerations that enter into his 
argument. 

A critic who splashed without ceremony into this argument might 
have accepted the main doctrine that food cannot be made to go 
round, without accepting the existing distribution of food as just or 
inevitable. But he was confronted with an explanation of that 
distribution which was as scientific as the explanation of poverty. 
As Professor Marshall has shown, the course of economic opinion has 
been profoundly affected by the fact that at the beginning of the 
nineteenth century the mathematical and physical groups of science 
were in the ascendant, and thus at a moment of critical importance 
in the development of economic speculation, all reasoning inclined 
to the deductive and abstract method. Both sides in politics gave 
their countenance to these economics of possession. Bentham, who 
laid the foundation of a philosophy that was fatal to the political pre¬ 
tensions of the aristocracy, and invented a formula that challenge^ 
the whole theory of a serf class on which his generation worked, was 
at the same time a warm defender of unlimited competition. 
Ricardo’s brilliant and rather labyrinthine deductive reasoning has 
led later students to the most diverse conclusions. No thinker has 
been so variously interpreted, and Socialism and Individualism alike 
have built on his foundations. But of the character of his immediate 
influence there can be no doubt. The most important effect of his 
teaching in this particular sphere was to create the impression that 
every human motive other than the unfailing principle of self-interest 
might be eliminated from the world of industry and commerce; that 
the forces of supply and demand settled everything; that the laws 
governing profits and wages were mechanical and fixed. The share 
of labour was thus decided just like the price of an article, by the 
sheer power of competition. And this share gravitated towards the 
minimum of subsistence. The natural price of labour, he argued, 
depended on the price of the food, necessaries, and conveniences 
required for the support of the labourer and his family. “The market 


THE WORKER AND THE COMING OF CAPITALISM 


139 


price of labour is the price which is really fixed for it from the natural 
operation of the proportion of the supply to the demand: labour is 
dear when it is scarce and cheap when it is plentiful. However 
much the market price of labour may deviate from its natural price, 
it has like commodities, a tendency to conform to it.” To do justice 
to Ricardo’s theory of wages, it would be necessary to take into account 
many important qualifications that enter into his analysis, and we do 
not pretend that these sentences exhaust his contribution. But we 
are not discussing Ricardo’s economics, we are discussing Ricardo’s 
economics as they were interpreted by the powerful classes. Ricardo’s 
ideas, as they were assimilated, helped to give a scientific basis to the 
existing distribution: he did not himself lay down an iron law, but 
his doctrine has commonly been treated as the doctrine of an iron 
law. Science seemed to put its seal on the irremediable poverty of 
the poor. 

11. THE GROWTH OF STATE ACTION AND VOLUNTARY 

ASSOCIATION 1 

If it be true that industry cannot endure unlimited competition, 
it is still more obvious that society, as long as inequalities remain, 
cannot rest on pure freedom of contract. It has to protect itself 
against the complete working out of the implications of capitalism. 
This it has done partly by the action of the state and partly by 
recognizing the existence and activities of voluntary associations. 
The best examples of these two methods are factory legislation and 
trade unionism. 

In the former, the state interferes to prescribe certain common 
rules which are to be followed in the conduct of industry; in the latter, 
the wage-earners combine to safeguard their interests. Each move¬ 
ment had to contend against strong opposition for the greater part of 
the nineteenth century, and even the advocates of the one or the other 
did not realize the part they were playing in effecting the stability 
of the capitalist state. Their function becomes clearer if it be sup- • 
posed that one of the methods had been adopted to the exclusion of 
the other. If society had defended itself against the possible anti¬ 
social consequences of industrialism solely by state action, the sphere 
of control would have been a great deal wider than it was in 1914. 
Bureaucratic socialism would have been a reality. 

1 Adapted with permission from J. F. Rees, A Social and Industrial History of 
England , pp. 147-48, 159. (Methuen & Co., Ltd., 1920.) 


140 


THE WORKER IN MODERN ECONOMIC SOCIETY 


On the other hand, if it had been left to the wage-earners to pro¬ 
vide a competent defence against possible exploitation, their organiza¬ 
tions would have had to perform so many functions that the state 
would have become relatively unimportant. 

In England the presumption in favour of political action, which 
is so marked throughout the nineteenth century, was strengthened by 
the successive extensions of the franchise. The conception of the 
state as something external gave place to the conception of it as the 
means by which the common will found expression, and consequently 
the antithesis between the individual and the state was blurred or 
denied. Individualists also had to admit that their doctrine of 
freedom of contract was not applicable in a great number of important 
instances because the parties to the contract were not really free. 
The state had therefore to interfere to secure genuine equality in 
bargaining. Along these lines some kind of agreement between 
Individualists and Collectivists was possible. Each side, for instance, 
came to support Factory Acts, Truck Acts, and Workmen’s Com¬ 
pensation Acts, though their theoretical reasons were different. 

12. AMERICAN SOCIAL IDEAS DURING THE LAST 

HALF-CENTURY 1 

It now remains to summarize and characterize as concisely as 
possible the broad tendencies of political thought during the last half 
century. Unquestionably the most significant features of this period 
were the gradual tendency toward concentration of political and eco¬ 
nomic institutions, and toward the socialization of the state. The 
tendency toward centralization, developing slowly at the outset, 
swept forward as the end of the century approached with increasing 
momentum. In city, state and nation, and in the industrial world 
as well, the trend was toward closer integration of the institutions of 
control, economic and political. The development of 'nationalism 
in the nation as a whole, the growth of “bosses” and organizations 
within the political party, and the appearance of the “trust” in the 
commercial world, the consolidation of powers in the form of the 
commission government in the city, the development of central con¬ 
trol in the state, were all evidences of the same general drift toward 
more compact organization. 

1 Adapted with permission from Charles E. Merriam, American Political Ideas , 
pp. 450-61. (The Macmillan Co., 1920.) 


THE WORKER AND THE COMING OF CAPITALISM 


141 

Again, the broadening of the purpose of the state was a con¬ 
spicuous feature of the time. Beginning with a theory of the 
limited function of the government, the new conditions and the 
new spirit of the time forced a gradual departure from the orginal 
position and the organized political society took up new duties on 
a much broader scale than ever before. Concentration of power 
and broadening of the scope of authority were typical of the institu¬ 
tional development of the period. On the theoretical side, the 
abandonment of the doctrine of weak government as the necessary 
defense of liberty was forced as the urgent need of more vigorous 
government began to be evident, while the early doctrine of laissez 
faire tended to retire before the theory of the broader social function 
of the political society. Taking the period as a whole, it was character¬ 
ized by comparative weakness of government and limitation of func¬ 
tion, but considering the tendencies of the time, it is clear that the 
broad movement was toward strengthening government and broaden¬ 
ing its function. Decentralization was on the decline, and non¬ 
interference as a political dogma was on the wane as the period came 
to a close. 

Broadly speaking three philosophies of action and interpretation 
were in competition during this time. They were the old time doc¬ 
trine of conservatism, centering around the unimpeded operations of 
the assumed “natural laws” of trade; the liberal or progressive 
theory demanding popular control of the most threatening features 
of the new industrialism in the interests of the many as against the 
few; and the collectivist philosophy demanding industrial democracy 
in the broadest sense of the term. Of these the first reigned without 
much opposition during the greater part of the time; the second rose 
to power as the middle of the period approached, and the third had 
no status until toward the middle of the period but gained in strength 
as the end of the period drew near. 

The proper scope of state activity, as a theoretical and practical 
field of political discussion, witnessed notable changes during this 
time. The period opened with an intense individualism dominant 
in all fields—in the business world where the economic doctrines of 
laissez faire coincided with the theory of the survival of the fittest, 
and both with the tendencies of strong and determined men to conduct 
their affairs without let or hindrance; in the legal field with the crys¬ 
tallization of the common law and the application of early common 
law theories to the problems of public law administered by an almost 


142 


THE WORKER IN MODERN ECONOMIC SOCIETY 


irresponsible judiciary. Mobility of population, mobility of occupa¬ 
tion, mobility of land, labor, and capital, all combined to make this 
doctrine supreme in spite of the sweeping changes in the industrial and 
urban worlds. 

Toward the middle of the period there came a change both in 
theory and in practice. Free land disappeared. The economic 
theory of the benevolence of competition was shattered by the sudden 
appearance of monopoly and unfair competition; the sociological 
theory of Spencer was matched by that of Ward, who urged the 
“efficacy of effort” as a legitimate interpretation of the Darwinian 
theory, and on the legal side a little later legal individualism by the 
assaults of the sociological school of jurisprudence. Meantime the 
steady pressure of conditions in cities and in industry had forced the 
practical recognition of many changes, if not because of a new theory, 
then at the imperative demand of intolerable human relations. A 
flood of social legislation followed in city, state and nation, sweeping 
into almost every way of life and every form of activity where the 
public developed an interest. Where the laissez faire doctrine was 
not abandoned, it was materially modified in actual practice. Its 
complete defense could no longer be made even by the greatest enthusi¬ 
asts for the principle. The most stubborn case for the old principle 
was made against organized labor under the plea of “freedom of 
contract,” and the “industrial liberty” of the citizen; but even here 
the battle was a losing one; for the tide turned strongly toward the 
relief of conditions that could not be tolerated on a democratic or 
even a human basis. The industrial and urban revolution took heavy 
toll of the doctrine of non-interference, whether in regulation of compe¬ 
tition in trade, in limitation of the rights of persons and property 
through the varied forms of the convenient “police power,” or through 
the slow broadening of the purposes of the state beyond the earlier 
function which Huxley once characterized as “anarchy plus a police¬ 
man.” 

To say that individualism was abandoned as a general theory 
during this period would be incorrect and misleading; but that the 
function of the state was largely expanded in practice and almost 
equally so in theory is undeniable. The collectivist doctrine in the 
form taught by the socialists was generally rejected, but the prac¬ 
tical necessity for broader action by the government overcame all 
scruples and compelled relief in the urgent situations precipitated by 
the urban and industrial revolutions. Ours was not a doctrinaire 


THE WORKER AND THE COMING OF CAPITALISM 


143 


collectivism; but its advance, regardless of the spirit in which it was 
made or the goal toward which it moved, was none the less evident and 
important. Nowhere was a tougher texture of legal and economic 
individualism encountered than in America, but for that very reason 
nowhere was the advance of a conscious social policy more marked 
and conspicuous and significant than here. 


See also Selection 3, chapter vi: American Political Pre¬ 
suppositions. 

13. THE INFLUENCE OF SCIENCE ON SOCIAL IDEAS 1 

The craftsman of the Middle Ages never doubted the reality of 
the universe depicted by theology. Performing all the labor incident 
to the creation of a finished product out of raw material, he could think 
in terms of a Deity who had made man with His hands and who 
arbitrarily changed the course of nature. The modern industrial 
worker, who performs a small part of the process incident to factory 
output, and whose universe is the universe of scientific fact, is more 
likely to regard himself as controlling and directing forces of nature 
which are represented in his machine. This latter point of view has 
its limitations and calls for corrective treatment, lest the individual 
engaged in industry come to regard himself as merely a cog in a 
mechanism. But it is accomplishing one beneficial result. It is 
instilling into the worker’s mind, and so into the minds of all mankind, 
the idea of natural causation; and once this idea becomes a major 
factor in human thinking, nature will become for all time the one and 
only source of authority in explaining phenomena. 

The triumph of the evolutionary concept completed the overthrow 
of those older ideas of the universe which culminated in medieval 
theology. Evolution was the final extension of that enlarging mental 
horizon disclosed by the fact of the earth’s sphericity and the Coper- 
nican explanation of the solar system, conceptions which are indis¬ 
solubly united and each of which represents a stride forward in the 
face of resistance. 

During the last three centuries, man’s picture of himself changed 
from that of a being, recently created and awaiting a day of judgment 
in the not distant future, to that of a being originating as part of 

1 Adapted with permission from Winterton C. Curtis, Science and Human 
Atfairs, pp. 5, 309-12. (Harcourt, Brace & Co., 1922.) 



144 


THE WORKER IN MODERN ECONOMIC SOCIETY 


organic nature and set in a universe without beginning and without 
end. The by-product of this intellectual revolution was an emancipa¬ 
tion of the human spirit from the bonds of authority. Authority 
indeed remains, but it is no longer the authority of book or priest, 
however potent such authority may still appear to be. In its place 
stands the authority of nature; and so great has been the emancipa¬ 
tion we have, as yet, recognized but an insignificant measure of the 
changes in human thinking which must follow. 

In the field of social phenomena, the influence of the evolutionary 
theory appears in the recurrent questioning of the necessity for exist¬ 
ing conditions. Whatever is may be the natural outcome of the 
evolution of society to date, but it is not thereby right nor is it neces¬ 
sarily permanent. The evolutionist may recognize the stability of 
social customs that have arisen by evolution; but he also recognizes 
these customs as subject to change. Moreover, the human race must 
consider the intelligent direction of its future evolution as a possibility, 
however remote. 

The influence of the evolutionary concept may be seen again in 
the attitude toward a variety of social problems. Disease and crime 
are not inevitable conditions to be treated by curative measures only. 
They are to be attacked with all the knowledge at our command, and 
finally eliminated by the evolution of a type of man and a form of 
society in which such evils will be non-existent. Man is no longer 
piously content with his lot, merely because he sees no prospect of 
immediately changing it. Conditions have changed in the past and 
mankind wants to change them in the future. Man is not content 
to let evolution take its course with him, he strives to make it go his 
way. Thus the insight into social problems which evolution has 
brought gives a habit of mind that will brook no limitation of the 
human spirit. As within the field of philosophy, so within the field 
of social phenomena) this changing point of view is an outcome of 
the recognition of a dynamic as opposed to a static world. 

There is thus taking place, under the influence of the evolutionary 
doctrine, a subtle change of ideas and of beliefs, comparable to the 
changes of intellectual outlook in the past, by which superstitions, 
like infant damnation, witchcraft, demoniacal possession, and the 
belief in ghosts were rendered impotent. Such changes occur in what 
may be designated the frame of mind. They are, seemingly, effected 
not so much by argument as by the imperceptible growth of a convic¬ 
tion that the traditional belief is unreasonable. Old beliefs often 


THE WORKER AND THE COMING OF CAPITALISM 


145 


persist, apparently in full vigor, until the collapse is at hand; but when 
beliefs begin to excite ridicule, their course is nearly run. The history 
of scientific progress has been marked by spiritual emancipations. 

9 

PROBLEMS 

p 

1. Suggest as concretely as you can what seem to you the most essential 
differences between social classes or groups today and in medieval 
times. On the basis of your analysis, do the differences seem pre¬ 
dominantly matters of degree or of kind? Assign to each of the 
differences its determining cause or causes. 

2. “The heyday of the gilds ended with the Tudor period, when control 
of industry, which had been predominantly local, became increasingly 
national in character.” Name all the reasons you can think of why 
national control should have set in at this time. 

3. “The changes in social life which have come since 1750 may be classi¬ 
fied as to cause or character under ( a) changes in technique, ( b ) changes 
in internal organization, (c) changes in commercial organization, 
(d) changes in social ideas.” List as many concrete factors as you can 
under each head. 

4. “The machine has changed men as well as methods.” How is this 
true ? To what extent ? 

5. “The influence on character which is exerted by industrial environ¬ 
ment is sufficiently illustrated by the fact that one finds in every major 
industry a distinctive type of human being.” Criticize this statement 
and its implications carefully. Is the suggestion of cause and effect 
necessarily accurate as it stands? In reading through the selections 
in this chapter, particularly those in Section B, try to visualize the 
possible- influence on “character” or “human nature” which the 
changes in industrial organization described may have had. 

6. What were the reasons for the change from the gild system to the 
domestic system ? How did they change the part played by the worker ? 
Was the domestic system “capitalistic” ? Why or why not ? 

7. “If we trace historically the growth of modern capitalist economies in 
the several industries we shall find that they fall generally into three 
periods: (1) The period of earlier mechanical inventions, marking the 
displacement of domestic by factory industry. (2) The evolution of 
the new motor in manufacture. The application of steam to the 
manufacturing process. (3) The evolution of steam locomotion, with 
its bearing on industry.” Can you suggest a fourth period ? A fifth ? 

8. “ Too much attention has been paid to monotony of machine work. The 
greater problem lies in the huge amount of deadening clerical work which 
has come about as a necessary adjunct of machine industry.” What do 
you think of this statement ? Why ? 


146 


THE WORKER IN MODERN ECONOMIC SOCIETY 


9. List as many differences as you can between the life of the modern factory 
worker and that of the medieval worker for which the application of 
“quantitative measurement” methods to industry seem responsible. 

10. What'is meant by the “scientific attitude of mind” and how has it 
affected industrial organization ? Where did it come from ? 

11. Go to the United States Census rethrns in the library, choose a single 
industry, and work out for that industry for each succeeding ten years 
the following comparative figures: ( a ) total capital invested; (b) 
total amount of product; (c) total number of men employed; ( d ) 
average capital invested per establishment; ( e ) average product per 
establishment; (/) average product per man employed. What is the 
significance of these figures ? 

12. What were the essential reasons for the enormous increases in popula¬ 
tion during the^nineteentlycentury ? 

13. Mr. J. A. Hobson lists the following conditions as determining the 
progress of an industry in its development as a machine industry: ( a) 
size and complexity of structure; (b) fixity in quantity and character 
of demand; (c) uniformity of material and of the processes of produc¬ 
tion; (d) durability of valuable properties; ( e ) ease or simplicity of 
labor involved; (/) skilled workmanship. Try to trace the effects of 
these conditions on the development of industries of which you have 
knowledge. 

14. What conditions enabled industrial England of the early nineteenth 
century to compete with colonial slave economy ? 

15. “The intellectualization of the town operative [assuming the process 
to be taking place] may be attributable to the thousand and one other 
influences of town life rather than to machinery, save indirectly so far 
as the modern industrial center is itself the creation of machinery.” 
Criticize. 

16. “It should be borne in mind, however, that in several large industries 
where machinery fills a prominent place, the bulk of the labor is not 
directly governed by the machine.” What industries, for example? 

17. What were the underlying reasons for the worker’s resistance to the 
installation of new inventions at the beginning of the indqstrial revolu¬ 
tion ? Do workers today take the same attitude ? Is there a single 
general answer ? If not, why not ? 

18. “The great defect of machinery, from the educative point of view, is 
its absolute conservatism.” What does this mean? 

19. What is meant by the “equality of workers before the machine”? 
What have been its historical effects (list as many as you can) ? 

20. “The absence of any true apprenticeship in modern factories prevents 
the detailed worker from understanding the method and true bearing 
even of those processes which are closely linked to that in which he is 
engaged.” What of it ? Is there any remedy ? 


THE WORKER AND THE COMING OF CAPITALISM 


147 


21. “There is a practical limit to specialization decreed by the general 
exigencies of industry.” What exigencies ? In what industries ? 

22. What should be the policy of education for the worker in modern 
industry ? 

23. “Standardization in production would have been impossible without 
standardization in commerce. Both are products of science.” What 
does this mean, and to what extent is it true ? 

24. “Throughout history, migrations have been one of the great causes of 
social change.” Can you apply this to the last three centuries ? What 
have been the determining causes of recent migrations ? 

25. Why should a study of “labor” concern itself with commercial and 
financial organization ? 

26. “The average level of comfort has been enormously raised by the 
changes of the last century. The modern factory hand lives as well as 
the primitive king.” Do you agree ? If you do, how explain industrial 
unrest ? Is the reason “human nature” ? 

27. “We cannot go back to a craftsman’s paradise.” What is a “crafts¬ 
man’s paradise” ? Do you think there ever was one ? If not, is there 
anything in the idea of craftsmanship which has any value for present- 
day life ? 

28. “The remedy for machines is more machines.” Meaning? Do you agree? 

29. “Capitalism is justified because through it we have gained whatever 
we have today in the way of advance over the Middle Ages.” “This is 
not true because we might have made equal or greater advances under 
another system.” What do you think? Do either of the quotations 
mean anything ? 

30. “Mechanical transport was chiefly responsible for the ‘commercial 
revolution. ’ ” Do you agree ? Why ? 

31. “The workday information and the reasoning by use of which all men 
today carry on their daily life is of the same character as that which 
guides the mechanical engineers; and this leads headlong to a mech¬ 
anistic conception of things.” What does this mean? Is it true? 
If so, what is its significance ? 

32. “The unit of productive organization, as a result of the new technique, 
has changed from the man to the shop.” Is this true ? How ? What 
is its significance for efficient production ? for industrial relationships ? 

33. “In craft days the owner was at once manager and worker. In early 
capitalist days the owner was manager and hired the worker. In the 
modern corporation typically both manager and worker are hired, with 
the controlling voice (theoretically, at least) the owner’s.” Can you 
see any historic reasons why “control” should have followed the right of 
ownership instead of—say—the function of management ? Is this the 
same as asking, “Why has industry become a profit-making enter¬ 
prise?” 


148 THE WORKER IN MODERN ECONOMIC SOCIETY 

34. Draw up an outline showing the “risks” of the worker of today as con¬ 
trasted with those in two previous periods. Are the changes chiefly in 
kind or in degree ? What are the determining causes ? 

35. Outline concretely what seem to you the outstanding results for the 
worker of the change to a “market” (pecuniary and speculative) 
society; as to the part he plays in society, his security, his welfare. 

36. Try to list the changes brought about in the life, task, position, and 
outlook of (a) the industrial worker and ( b ) the agricultural laborer 
by (1) the clock, (2) the newspaper, (3) the railroad, (4) the telegraph 
and telephone, (5) the steam engine, (6) the stock ticker, (7) the Ford 
car, (8) negotiable instruments, (9) the movies, (10) clothing fashions, 
(n) indirect costs. 

37. What influences has the growth of industrial cities had on workmen ? 

38. Contrast the modern with the medieval city as to (a) size; ( b) cause of 
growth; ( c ) unity of life; (rf) community spirit; ( e) permanence of 
population; (/) sectional and class divisions; (g) healthfulness; ( h ) 
religious life; (i) intellectual life; (j) safety. 

39. “One effect of the development of rapid transit and rapid communication 
is that mob feeling and mob action can extend throughout a whole 
nation or a whole economic group instead of being confined to the 
bounds of a single community.” What do you think of this statement ? 
Has it any significance ? 

40. “Industrial society has standardized men’s minds, stamping them all 
with a common group trade-mark, just as it has standardized processes 
and products.” “Through wider associations and contacts, men’s 
minds and imaginations have been loosed from the bonds of custom 
and given a wider range than was ever before possible.” Which, if 
either, is true ? 

41. “Class conflict inevitably arises whenever men begin working exclu¬ 
sively at ‘different’ things—i.e., when they begin to specialize on a 
narrow scale.” Do you think this statement is universally true? 
Has it any historical basis ? 

42 “The outstanding industrial development of the nineteenth century 
was the complete specialization of men. The twentieth century is 
proceeding apace to make specialists of its women.” Do you think this 
a fair deduction ? 

43. “Divine law was succeeded by natural law as the recognized and 
authoritative determinant of men’s economic relations with each 
other. They were equally unyielding in their decrees as to the distribu¬ 
tion of wealth.” What was this “natural” law, where did it come from, 
what were its assumptions and its consequences ? 

44. “Darwinism has been used freely both to justify and to attack the 
existing order.” How could this be true? What do you think has 


THE WORKER AND THE COMING OF CAPITALISM 


149 


been the outstanding influence of the evolutionary conception on 
social thought ? 

45. What is the part that social theory plays in economic organization ? 

46. Can you suggest the main influences tending to discredit the laissez 
faire school in England? Is laissez faire dead or alive? Has it any 
practical consequence today ? 

47. Define capitalism. Would your definition as of today be different 
from your definition as of 1800? How different? Do these differ¬ 
ences throw any light on the task of analyzing present-day industrial 
relationships ? 

REFERENCES FOR FURTHER READING 

Ashley, W. J., Economic Organization of England 

-, An Introduction to English Economic History and Theory 

Bland, Brown and Tawney, English Economic History , Select Documents 
Cheyney, E. P., An Introduction to the Social and Industrial History of Eng¬ 
land 

Curtis, W. C., Science and Human Affairs 
Fueter, E., World History , 1815-1920 
Hammond, J. L., and Barbara, The Skilled Laborer 

-, The Town Laborer 

-, The Village Laborer 

Hobson, J. A., The Evolution of Modern Capitalism 

Knowles, L. C. A., The Industrial and Commercial Revolutions in Great 
Britain during the 19th Century 

Lipson, E., An Introduction to the Economic History of England 
Perris, G. H., The Industrial History of Modern England 
Pound, Arthur, The Iron Man in Industry 
Rees, J. F., A Social and Industrial History of England 
Traill, H. D. and Mann, J. S., Social England 





CHAPTER VI 


ECONOMIC DEVELOPMENT IN AMERICA 

As already suggested, the present chapter is designed to carry the 
analysis of chapter v over into its peculiarly American environment. 

The arrangement of the materials is as follows: 

Section A {The American Heritage) is intended to suggest the back¬ 
ground, physical, racial, and spiritual, on which the American economic 
organization has been developed. Particular attention should be 
given these selections, especially Selection i, as they help explain 
many otherwise inexplicable differences between European and 
American economic development today. 

Section B {The Development of American Industry) should be 
regarded as in part an addition to, in part simply a modification 
of, the general sketch of capitalistic organization already presented 
in chapter v preceding. Selection 4 develops in greater detail the 
part which mechanical transport has played in making a complex 
interdependent industrial society out of an agricultural community. 
(Cf. Selection 8 in chapter v). Selection 5 gives an American version 
of the change from simple to complex industry and the reasons for it. 

Section C should be regarded as case material. It presents the 
actual changes which have taken place in a typical American industry, 
and should be studied with the aim of tracing in concrete terms some 
of the tendencies suggested in the previous selections and of gaining 
additional light on their meaning. 

Section D gives a brief cross-section view of the actual (though 
changing) economic and social groupings to be found in the United 
States at the present time as a result of the changes already developed. 

A. The American Heritage 

1. THE INFLUENCE OF THE AMERICAN FRONTIER 1 

Behind institutions, behind constitutional forms and modifica¬ 
tions, lie the vital forces that call these organs into life and shape 
them to meet changing conditions. The peculiarity of American 

1 Adapted with permission from Frederick J. Turner, “The Frontier in Ameri¬ 
can History ” (Fifth Yearbook of the National Herbarl Society ) (University of Chicago 

150 


ECONOMIC DEVELOPMENT IN AMERICA 


I5i 

institutions is the fact that they have been compelled to adapt them¬ 
selves to the changes of an expanding people—to the changes involved 
in crossing a continent, in winning a wilderness, and in developing at 
each area of this progress out of the primitive economic and political 
conditions of the frontier into the complexity of city life. Limiting 
our attention to the Atlantic coast, we have the familiar phenomenon 
of the evolution of institutions in a limited area, such as the rise of 
representative government; the differentiation of simple colonial 
governments into complex organs; the progress from primitive 
industrial society, without division of labor, up to manufacturing 
civilization. But we have in addition to this a recurrence of the 
process of evolution in each western area reached in the process of 
expansion. Thus American development has exhibited not merely 
advance along a single line, but a return to primitive conditions on a 
continually advancing frontier line, and a new development for that 
area. This perennial rebirth, this fluidity of American life, this 
expansion westward with its new opportunities, its continuous touch 
with the simplicity of primitive society, furnish the forces dominating 
American character. 

The American frontier is sharply distinguished from the European 
frontier—a fortified boundary line running through dense popula¬ 
tions. The most significant thing about the American frontier is 
that it lies at the hither edge of free land. 

Our early history is the study of European germs developing in an 
American environment. Too exclusive attention has been paid by 
institutional students to the Germanic origins, too little to the Ameri¬ 
can factors. The outcome is not the old Europe, not simply the 
development of Germanic germs. The fact is that here is*^ new 
product that is American. The advance of the frontier has meant 
a steady movement away from the influence of Europe, a steady 
growth of independence on American lines. And to study this ad¬ 
vance, the men who grew up under these conditions, and the political, 
economic, and social results of it is to study the really American part 
of our history. 

So long as free land exists, the opportunity for a competency 
exists, and economic power secures political power. But the de¬ 
mocracy born of free land, strong in selfishness and individualism, 

Press, 1899); and “The Contribution of the West to American Democracy” 
Atlantic Monthly , XCI (January, 1903), 90-93. Since reprinted in The Frontier in 
American History , pp. 1-38, 243-68. (Henry Holt and Co., 1920.) 



152 


THE WORKER IN MODERN ECONOMIC SOCIETY 


intolerant of administrative experience and education, and pressing 
individual liberty beyond its proper bounds, has its dangers as well 
as its benefits. Individualism in America has allowed a laxity in 
regard to governmental affairs which has rendered possible the spoils 
system and all the manifest evils that follow from the lack of a highly 
developed civic spirit. In this connection may be noted also the 
influence of frontier conditions in permitting lax business honor, 
inflated paper currency and wild-cat banking. A primitive society 
can hardly be expected to show an intelligent appreciation of the 
complexity of business interests in a developed society. 

From the conditions of frontier life came intellectual traits of 
profound importance. That coarseness and strength combined with 
acuteness and inquisitiveness; that practical, inventive turn of mind, 
quick to find expedients; that masterful grasp of material things, 
lacking in the artistic but powerful to affect great ends; that restless, 
nervous energy; that dominant individualism, working for good and 
for evil, and withal that buoyancy and exuberance which comes with 
freedom—these are traits of the frontier, or traits called out elsewhere 
because of the existence of the frontier. He would be a rash prophet 
who should assert that the expansive character of American life has 
now entirely ceased. Movement has been its dominant fact, and, 
unless this training has no effect upon a people, the American energy 
will continually demand a wider field for its exercise. But never again 
will such gifts of free land offer themselves. For a moment, at the 
frontier, the bonds of custom are broken and unrestraint is triumphant. 
There is not tabula rasa. The stubborn American environment is there 
with its imperious summons to accept its conditions; the inherited 
ways <1 doing things are also there; and yet, in spite of environment, 
and in spite of custom, each frontier did indeed furnish a new field of 
opportunity, a gate of escape from the bondage of the past; and fresh¬ 
ness, and confidence, and scorn of older society, impatience of its 
restraints and its ideas, and indifference to its lessons, have accom¬ 
panied the frontier. What the Mediterranean Sea was to the Greeks, 
breaking the bond of custom, offering new experiences, calling out 
new institutions and activities, that, and more, the ever retreating 
frontier has been to the United States directly, and to the nations of 
Europe more remotely. And now, four centuries from the discovery 
of America, at the end of a hundred years of life under the Constitu¬ 
tion, the frontier has gone, and with its going has closed the first 
period of American history. 


ECONOMIC DEVELOPMENT IN AMERICA 


153 


While the individualism of the frontier, so prominent in the 
earliest days of the Western advance, has been preserved as an ideal, 
more and more these individuals struggling each with the other, deal¬ 
ing with vaster and vaster areas, with larger and larger problems, have 
found it necessary to combine under the leadership of the strongest. 
This is the explanation of the rise of those pre-eminent captains of 
industry whose genius has concentrated capital to control the fun¬ 
damental resources of the nation. 

Most important of all has been the fact that an area of free land 
has continually lain on the western border of the settled area of the 
United States. Whenever social conditions tended to crystallize in 
the East, whenever capital tended to press upon labor or political 
restraints to impede the freedom of the mass, there was this gate of 
escape to the free conditions of the frontier. These free lands pro¬ 
moted individualism, economic equality, freedom to rise, democracy. 
Men would not accept inferior wages and a permanent position of 
social subordination when this promised land of freedom and equality 
was theirs for the taking. Who would rest content under oppressive 
legislative conditions when with a slight effort he might reach a land 
wherein to become a co-worker in the building of free cities and free 
states on the lines of his own ideal ? In a word, then, free lands meant 
free opportunities. 

The free lands are gone. The material forces that gave vitality 
to Western democracy are passing away. It is to the realm of the 
spirit, to the domain of ideals and legislation, that we must look for 
Western influence upon democracy in our own days. 

Western democracy has been from the time of its birth idealistic. 
With all the materialism of the pioneer movements, this idealistic 
conception of the vacant lands as an opportunity for a new order of 
things is unmistakably present. Nor was this idealism by any 
means limited to the American pioneer. 

To the old native democratic stock has been added a vast army of 
recruits from the Old World. To them America was not simply a 
new home; it was a land of opportunity, of freedom, of democracy. 
It meant to them, as to the American pioneer that preceded them, 
the opportunity to destroy the bonds of social caste that bound them 
in their older home, to hew out for themselves in a new country a 
destiny proportioned to the powers that God had given them, a chance 
to place their families under better conditions and to win a larger life 
than the life that they had left behind. 


154 


THE WORKER IN MODERN ECONOMIC SOCIETY 


In this connection it must also be remembered that these demo¬ 
cratic ideals have existed at each stage of the advance of the frontier, 
and have left behind them deep and enduring effects on the thinking 
of the whole country. Long after the frontier period of a particular 
region of the United States has passed away, the conception of society, 
the ideals and aspirations which it produced, persist in the minds of 
the people. So recent has been the transition of the greater portion 
of the United States from frontier conditions to conditions of settled 
life, that we are, over the large portion of the United States, hardly 
a generation removed from the primitive conditions of the West. If, 
indeed, we ourselves were not pioneers, our fathers were, and the 
inherited ways of looking at things, the fundamental assumptions of 
the American people, have all been shaped by this experience of 
democracy on its westward march. 

2. IMMIGRATION AND THE DEVELOPMENT OF THE * 
CAPITALISTIC SPIRIT IN AMERICA 1 

A discussion of the development of the capitalistic spirit in the 
United States may be placed under three headings. 

1. The elements of the capitalist spirit have had a niche in the 
American national character ever since the foundation of the colonies, 
and even before that spirit took form and substance, i.e., before ever 
there was an economic order inspired by it. 

2. The early stages of the capitalist spirit changed into the later 
and fully perfect stages sooner and more completely in America than 
anywhere else. There is conclusive evidence showing that the ideas 
of modern Americanism had already taken root at the beginning of 
the nineteenth century, and had even as far back as that day com¬ 
menced to shape life according to their own liking. 

3. Whatever the results of the capitalist spirit may be, you will 
find them developed to their utmost in the United States today. 
There the strength of that spirit is as yet unbroken; there the whirl¬ 
wind still rages. 

If we are content to find a single cause, it would be the breach 
with all old ways of life and all old social relationships. Indeed, the 
psychology of the stranger in a new land may easily be explained by 
reference to this one supreme fact. His clan, his country, his people, 
his state, no matter how deeply he was rooted in them, have now 

1 Adapted with permission from Werner Sombart, The Quintessence of Capital¬ 
ism, pp. 151-52, 301-7. (E. P. Dutton & Co., 1915.) 


ECONOMIC DEVELOPMENT IN AMERICA 


155 


ceased to be realities for him. His first aim is to make profit. How 
could it be otherwise? There is nothing else open to him. In the 
old country he was excluded from playing his part in public life; in 
the colony of his choice there is no public life to speak of. Neither 
can he devote himself to a life of comfortable, slothful ease; the new 
lands have little comfort. Nor is the newcomer moved by sentiment. 
His environment means nothing to him. At best he regards it as a 
means to an end—to make a living. All this must surely be of great 
consequence for the rise of a mental outlook that cares only for gain; 
and who will deny that colonial activity generates it ? 

One characteristic of the stranger’s activity, to be a settler in a 
new or an old land, follows of necessity. I refer to the determination 
to apply the utmost rational effort in the field of economic and technical 
activity. The stranger must carry through plans with success because 
of necessity, or because he cannot withstand the desire to secure his 
future. On the other hand, he is able to do it more easily than other 
folk because he is not hampered by tradition. This explains clearly 
enough why alien immigrants, as we have seen, furthered commercial 
and industrial progress wherever they came. Similarly we may thus 
account for the well-known fact that nowhere are technical inventions 
so plentiful as in America, that railway construction and the making 
of machinery proceed much more rapidly there than anywhere else 
in the world. It all comes from the peculiar conditions of the problem, 
conditions that have been termed colonial—great distances, dear 
labour, and the will to progress. The state of mind that will have, 
nay, must have, progress is that of the stranger, untrammelled by the 
past and gazing towards the future. 

3. AMERICAN POLITICAL PRESUPPOSITIONS 1 

It may be advisable to state with some explicitness what may be 
considered the fundamental notions which were commonly accepted 
when our national and state constitutions were established. The 
underlying idea was that men originally existed in a state of nature free 
from restraint. Each man was an individual sovereign and possessed 
of all rights, though dependent entirely upon his own strength to 
defend his rights. Society was formed by agreement among men, 
each individual surrendering a portion of his natural rights and 
retaining others which were inviolably his. Government and po- 

1 Adapted with permission from A. C. McLaughlin, The Courts, the Constitution 
and Parties, pp. 189-95, 261-80. (University of Chicago Press, 1912.) 


156 THE WORKER IN MODERN ECONOMIC SOCIETY 


litical organization also rested upon agreement. Thus through the 
conscious action and consent of individuals, permanent institutions 
were established. Now beneath these ideas of political philosophy 
was what I may call the metaphysical notion that unity can be formed 
by the conscious action of so many isolated beings—unity can be 
formed by the separate movement of isolated atoms. Akin to this 
compact idea and necessarily bound up with it was the idea that man 
could bind himself; obligation grew out of consent, and did not ne¬ 
cessarily depend on force, certainly not on a pre-existing force. Law 
was not necessarily the expression of the will of a pre-existing superior 
directed toward an inferior, but rested like everything else on the 
consent or the acquiescence of the individual. Not that any indi¬ 
vidual could at any time cast off his obligations and recall his acqui¬ 
escence; on the contrary, real obligations permanent and binding 
came from original agreement. 

It will be seen at once that there is something very familiar in 
many of these doctrines, even at the present. Some of them have 
become embodied in legal phrases and in political catchwords. In 
order that the influence and meaning of these doctrines may be more 
fully seen, it may be well to phrase the fundamental ideas of modern 
political philosophy. The supposition that society originated in 
compact is now discarded and with it the notion that man ever existed 
in a state of nature possessed of all rights. Society is looked upon as 
organic, a natural thing, and not the result of intellectual agreement; 
society is not superimposed on man, but, as Aristotle said, man is 
by nature (originally) a political being. 

None the less, the principle that the constitution is a compact 
into which each individual enters out of a state of isolation, which the 
philosophers called the state of nature, has deeply and perhaps per¬ 
manently affected our public law. It is astonishing and impressive 
to see the modern jurist talking in terms of compact and natural 
rights, after the fundamental conceptions on which those terms rest 
have altogether disappeared from ordinary modern thought and 
modern life. We thus find perpetrated in our constitutional law—• 
not to speak of other branches of jurisprudence—a method of thinking 
that the rest of society has entirely abandoned; and one of the greatest 
puzzles of modern times is to adapt a system of judicature founded in 
extreme philosophic individualism to the needs of organic society. 

Perhaps it would be more nearly correct to say that there is always 
in society a conflict between the individual and society; but, with 



ECONOMIC DEVELOPMENT IN AMERICA 


157 


all our aggressive individual initiative, the Americans have been 
gifted too with humanitarian sentiment and with remarkable power 
of political and social combination. The great combines are in them¬ 
selves made possible by this spirit and this capacity; and it is a strik¬ 
ing fact that, manifesting as they do this phase of American ability, and 
illustrating in all their activities the essential organic compactness of 
American life, they seek to be governed by the principles of pure 
individualistic law, inherited from a time of individualistic thought 
and endeavor. I am not unwilling to admit that the doctrine of 
natural right and of contract may be a convenient fiction, and I 
should like to believe that law, based on a principle of thinking foreign 
to the activity and foreign to the thought of the community in which 
it acts, can be abiding and useful; but there is an evident difficulty 
in adjustment. Whatever my fears or beliefs may be, the facts are 
so; and surely it is a startling truth, that just as a phase of human 
thought, which in some of its aspects was older than the Christian era, 
was beginning to pass away from the human mind, new bodies politic 
should be established in this new world based on these old fundamental 
conceptions, which were indeed for the first time thus given adequate 
institutional expression. 

The great movement for individualism came to its fullest fruitage 
in the Revolution, and was installed in instruments of government 
that were declared to be permanent; states were organized on a basis 
of individualistic democracy, just as democracy was about to leave 
its phase of pure individualism and reach out for a higher, deeper, and 
different meaning—moving on into a condition of society in which 
the most selfish should reap their highest reward not through individual 
and detached effort, but through combination; in which the propelling 
forces that are upbuilding come from surrender to the spirit of brother¬ 
hood and from an effort to raise one’s fellows; in which, more than 
ever before, government is called on to do the things we cannot 
separately do ourselves. And so again the puzzling problem which 
is being worked out in the legislative halls, in the social order, in the 
books and brains of thinking men, is how to adapt institutions based 
on individualism, the product of centuries of effort to reach personal 
right and personal justice free from the restraints and the wrongs of 
external and arbitrary power—how to adapt such institutions and 
how to fashion our political thinking to a new order of things. 


See also Section D, chapter v: The Change in Social Ideas. 



158 THE WORKER IN MODERN ECONOMIC SOCIETY 


B. The Development of American Industry 

4. TRANSPORTATION AND COMMUNICATION 

[Note: The changes in American economic life of the last century 
may quite truthfully be regarded as centering in the development 
of the American railway. The closing of the frontier, the crea¬ 
tion of a national and international market, the increasing urbani¬ 
zation of the country, the growing dominance of industrial over 
agricultural interests, the increasingly “capitalist” organization of 
agriculture itself, all these and many other influences may be traced 
to the period of unprecedented railway expansion beginning roughly 
at the close of the Civil War. The story of American railway develop¬ 
ment itself, with its picturesque “captains of industry,” its dramatic 
“pushfulness,” its financial piracies, and its technical problems, 
is a fascinating one, and it offers as well, in its later stages, a unique 
field for study of the relationships among the various groups which 
make up modern industry. We are here concerned, however, only 
with getting some glimpses of the part which the railways Lave played 
in making the country a social and economic unit and the r influence 
on American industrial, commercial and financial organization, with 
a hint here and there as to the bearing which this has on the place the 
wage-earner occupies in modern America as contrasted with his place 
at the beginning of the nineteenth century. These brief selections 
should be borne in mind in reading the materials on economic organiza¬ 
tion immediately following.— Ed.] 

a) A SURVEY OP THE EFFECTS OF TRANSPORTATION DEVELOPMENT 1 

The commercial, social, and political relations of the nations have 
been revolutionized almost within the last fifty years by the develop¬ 
ment of - improved means of communication and transportation. 
Previous to that period each nation lived almost wholly within itself. 
The change began about the beginning of the present century with the 
revolution of the shipping business occasioned by the use of steam. 

Fifty years ago the mails were irregular and infrequent, while 
the charges were almost prohibitory. Commerce received a new 
impetus by the introduction of postage-stamps in 1840 and the 
sweeping reduction made by England at that time in postal rates, 
which were cut down to one-tenth of the previous charges. Within 

1 Adapted from the Report of the Senate Select Committee on Interstate Commerce 
(1886), pp. 3-9. 


ECONOMIC DEVELOPMENT IN AMERICA 


I 59 


the next ten years the leading countries of Europe and the United 
States adopted the policy of cheap postage and greatly increased 
the efficiency of their postal service. There has since been a steady 
improvement and extension of the system throughout the world, 
with constant reductions in rates, until every civilized country has 
united with the Postal Union organized ten years ago; the poorest 
citizen can afford to transmit a letter to any part of the globe, and the 
number of letters and packages distributed by mail annually is 
10,000,000,000. During the same period another revolution in the 
transmission of intelligence and methods of business has been effected 
by the invention of the telegraph, which dates from 1837, the first 
American line being constructed in 1844 by the aid of the General 
Government. The extent of this change is indicated by the statistics., 
which show that there are now in operation 600,000 miles of line, 
comprising 1,600,000 miles of wire. 

But still more marvelous have been the changes brought about 
in the commercial, political, and social relations of nations, communi¬ 
ties, and individuals by the improved facilities for transportation and 
intercourse afforded by the railroad, all within the present century, 
and mainly within the last thirty-five years. As Governor Horatio 
Seymour says: “The chief element in the prosperity of every State 
or nation is the economy of transportation of persons and property. 
It is the marked fact in the difference between civilization and 
barbarism.” 

At the beginning of the present century the transportation of 
commodities of exchange for any considerable distance within the 
United States, except by water, was unknown, and passenger journeys 
were attended with hardship and difficulty. Then came the era of 
turnpike roads, which in time greatly facilitated through travel and 
reduced the cost of transportation overland. Then came the railroad 
and the problem of overland transportation was solved when the 
locomotive was invented. 

As the railroads have made possible and facilitated the exchange 
of products throughout the whole of our vast territory, the natural 
resources of the nation have been developed and have become avail¬ 
able, and its productive power has been wonderfully augmented. 
Through the agency of the railroad the vast internal commerce of the 
country has been enabled to brush aside the barriers formerly inter¬ 
posed by the limitations of distance between the sources of supply 
and demand. The producer and the consumer, however widely sep- 


i6o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


arated in fact, are practically being made next-door neighbors, and 
this is becoming true throughout the world as well as throughout the 
United States. The products of the country are to a very consider¬ 
able extent dependent upon the railroads for the means of transporta¬ 
tion, which makes them marketable, and the railroad system, as a 
whole, directly or indirectly affects and enters into every business 
interest, while its operations extend into every portion of the Union. 

See also Selection 5 b following and 6b, chapter v: The Influence of 
Mechanical Communication. 

b ) THE INFLUENCE OF THE RAILWAY ON THE LIVES OF THE 

WORKING POPULATION 

i 1 

Dealing in round figures, these railways move about 400,000,000 of 
tons a year. Half of it is food and fuel. Half of life is the struggle 
for food and fuel. Half of the income of every man who works for his 
living, and belongs to the so-called working classes—I use the term 
without any obnoxious distinction—half of the life of 90 per cent of 
the people in this community is a struggle for food and fuel. 

The railroad has reduced that struggle in greater measure than 
any other instrumentality that has ever been applied since the intro¬ 
duction of steam. Why? Because it has brought the measure of 
time and distance, i.e., the movement of a year’s supply of food for 
the mechanic in Massachusetts a thousand miles, down to the measure 
of one day’s labor. If a mechanic will give up one holiday a year he 
is placed along-side of the prairie, and distance is eliminated from 
his condition. What does it amount to in gross ? For the movement 
of that fuel, clothing, food, and means of shelter, which constitutes 
the great bulk of railway service, five or six hundred millions of 
dollars a year is paid. It is almost as heavy a charge as taxation. 

it 2 

The comparative isolation of business centres in early days and the 
lack of facilities for rapid communication between them materially 
affected the condition of the wage laborer. The risks of business were 
greater, and no industry could be considered permanent when it was 

1 i) Adapted from the testimony of Edward Atkinson before the Senate Select 
Committee (1886), Testimony, pp. 319-20. 

2 ii) Taken from “History of Wages and Prices in Massachusetts: 1752-1883,” 
Sixteenth Annual Report of the Massachusetts Bureau of Statistics of Labor , Parts III 
and IV (Boston, 1885), p. 14. 



ECONOMIC DEVELOPMENT IN AMERICA 161 

impossible to forecast the state of the market; for instance, the man¬ 
ufacturer in Massachusetts was for weeks ignorant of affairs in centres 
of distribution like Philadelphia which might materially affect the 
price of his product. All commerce and manufacturing were then of 
the nature of a venture, and the labor dependent upon industrial opera¬ 
tions thus limited remained more or less uncertain of employment. 

The same conditions which prevented the free and rapid exchange 
of products, raised the price and limited the variety of articles for 
household consumption, except such supplies as eggs, corn and rye 
meal, etc., which could be easily and cheaply procured on the farm 
near the consumer; and, beyond all, the laborer could not easily 
change his environment. Once located it was difficult for him to 
remove to other industrial neighborhoods, and this frequently operated 
to his disadvantage by limiting his employment and reducing his 
wage. 

• • • 

m 1 

One of the effects the early railroads had upon manufacturing was 
the enlargement of the labor force. The railroads brought middle 
western farms in competition with New England and New York. 
These farms had been hard hit by the Erie Canal, but the railroads 
delivered a finishing blow. Farms in the East were abandoned to 
their fate and their former owners sought refuge in factories. Labor 
seeking factory jobs was a novel experience for America where manu¬ 
facturers were accustomed to combing the highways and byways to 
induce workers to accept places in the mills. But the railroads did 
more than this; they gave an impetus to the use of farm machinery 
by opening territories where it was impossible to secure agricultural 
labor. The machines in turn freed farm laborers everywhere, and 
these former farm servants too drifted to the factories. Then the 
railroads extended dazzling opportunities to immigrants by making 
public lands available for settlement, thus starting an immigrant 
flow that the factories tapped to good advantage. After 1830, there¬ 
fore, labor shortage was no longer so acute. 

5. CHANGES IN ECONOMIC STRUCTURE 

a) THE DIFFICULTIES OF EARLY INDUSTRY 2 

In a country so sparsely settled, yet so extensive in area as America, 
it was natural that labor would be scarce. Land was to be had for 

1 Taken with permission from Malcolm Keir, Manufacturing Industries in 
America , pp. 49-50. (The Ronald Press Company, 1920.) 

2 Adapted with permission from Malcolm Keir, Manufacturing Industries in 
America, pp. 32-36. (The Ronald Press Company, 1920.) 


162 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the taking, so why should any man work for another ? As a conse¬ 
quence wages were very high, ranging from two to six times the cost 
of living. A mechanic even as late as 1832 could save enough in four 
to six months to buy an 80-acre farm. Farmers could afford high 
wages because they had no capital outlay for land, hence no interest 
charges; there were no tithes and taxes were low; on the other hand, 
the land gave a large increase and the market absorbed all that was 
grown. Yet even farmers had trouble in securing permanent labor 
and had to resort to importing convicts, indentured servants, or 
slaves. If farmers in a superior situation could not secure labor, how 
much more of a handicap was it to manufacturers in an inferior natural 
position. It costs so much to train workers that manufacturers must 
have a permanent labor force, yet in America the high wages paid, 
plus the cheapness of living, enabled wage workers to set up for them¬ 
selves as proprietors of land in two or three years’ time. Hence a 
manufacturer’s force was always a succession of learners, a condition 
that operated forcibly in restricting manufacturing enterprises. 


TABLE V 

Population in Thousands 


Place 

1701 

1749 

1775 

New Hampshire. 

10 

30 

102 

Massachusetts. 

70 

220 

352 

Rhode Island. 

10 

35 

58 

Connecticut. 

30 

100 

262 

New York. 

30 

100 

238 

New Jersey. 

iS 

60 

138 

Pennsylvania. 

2o\ 


/ 34 i 

Delaware.. 

• J 

250 

l 37 

Maryland. 

25 

85 

174 

Virginia. 

40 

85 

300 

North Carolina. 

5 

45 

181 

South Carolina. 

7 

30 

93 

Georgia. 


6 

27 





Furthermore the labor was not massed in towns or cities but spread 
out thinly over a wide area. This was particularly true in the south¬ 
ern colonies where the type of agriculture demanded large land hold¬ 
ings but did not call for town facilities because each plantation-owner 
sold his own produce over his own wharves. At the opening of the 
Revolution there were only 3,000,000 people in the colonies and these 
were scattered all the way from Maine to Georgia, as shown in the 
foregoing table from estimates printed in the Census of 1850. 


























ECONOMIC DEVELOPMENT IN AMERICA 163 

Abundance of capital is as essential to manufacturing enterprises 
as an ample supply of labor. It is not true that there was an absence 
of capital in the colonies, but it is a fact that whatever capital was 
present constantly assumed fixed forms. It went into buildings, 
cattle, work animals, or tools, and left but little free to conduct a go¬ 
ing business. Hence manufacturing might start, but it could not 
borrow capital for running expenses or for expansion. What small 
amount of capital was available constantly tended to flow abroad to 
pay for imports. The result of these facts in respect to capital is 
shown in the statement that in 1781 there were but three banks in 
America—one in Philadelphia, one in New York, and a third in 
Boston. 

A lack of free capital might have been met by a system of long¬ 
term credits. But in a country so young, where capital was in such 
demand for establishing homes and farms, it was compulsory to make 
a small amount do a large aggregate of work; in short, the turnover 
of capital had to be large and quick. Hence long-term credits were 
unknown to American capitalists. The colonial efforts to provide a 
more elastic currency led only to inflation and high prices. Without 
labor, without free capital, and without credit, manufacturing could 
make but little headway in the colonial area. There was so little 
private enterprise that at the time of the Revolution Congress itself 
was forced to erect and operate the little forges and furnaces that 
furnished munitions of war. 

Even if there had been an adequate labor force and a supply of 
capital, still there would have been little manufacturing in colonial 
America because of the absence of markets. The lack of money 
operated against extensive exchanges at a distance, and trade was by 
barter between individuals. These two facts—the economic inde¬ 
pendence of farmers, and the absence of money wages—practically 
eliminated any general market. Hence a manufacturer was strictly 
limited to his own neighborhood, and even there was put to much 
inconvenience to dispose of his wares. 

This feature of American colonial manufacturing was heightened 
by the difficulty of transportation; distant overland journeys were 
impossible because the country was a well-nigh trackless forest. The 
only means of easy communication was by water. Any place avail¬ 
able to American manufacturers by water was equally accessible to 
European producers and since the people preferred the better made, 
better finished European goods, American wares could not compete. 


164 


THE WORKER IN MODERN ECONOMIC SOCIETY 


b) THE DEVELOPMENT OF THE STEEL INDUSTRY 1 

The story of iron and steel in the United States turns about one 
central theme, the market for the products. As the market has 
changed, so has the location of the industry shifted, its technique 
advanced, and its output been given new forms. Raw materials, 
especially fuel, have had an important bearing upon the manufacture 
of iron, particularly upon the localization of the primary branch that 
transmutes ore into pig iron; nevertheless the power of the market 
has dominated raw materials, and even forced the adoption of new 
fuels. An account of iron and steel is a miniature of the industrial 
chronicles of the United States. 

While it is true that the industrial expansion of the East was 
reflected in the progress of iron manufacture, nevertheless by com¬ 
parison with later events, the earlier iron trade was a small affair. 
The one factor of all others that has placed the iron industry of 
America before all competitors in the world is the railroad. Railroads 
have been the greatest consumers of iron within the history of that 
commodity. To build and equip the railways of the United States 
has taxed the iron industry to the utmost; it has enforced changes in 
location, the adoption of new fuels and ores, and an almost unbeliev¬ 
able advance in technique. Yet the full effect of the changes wrought 
was not felt until the Civil War. 

The principal market for iron before i860 had been in the East, for 
it was there that railways were first built, where factories prospered, 
and where the bulk of the population dwelt. After the war, railways 
pushed on beyond the Mississippi and became transcontinental in 
scope. To supply the materials for the construction and equipment of 
the railways expanding with such amazing rapidity staggered the 
already burdened iron industry. The influence of the railroads upon 
iron production, however, was by no means limited to the necessities of 
the roads themselves, for every other industry whose activity was 
increased by the railroads augmented the demand for iron. 

For example, railroads made it possible to market wheat, corn, 
oats, and rye raised in the territory beyond the Mississippi, but it was 
impossible to plant, cultivate, and harvest great grain crops without 
the aid of machinery. Hence railroads indirectly stimulated the 
manufacture of labor-saving mechanism for use on farms, and each 

1 Adapted with permission from Malcolm Keir, Manufacturing Industries in 
America, pp. 96, 119, 123-26, 130-36. (Copyright by the Ronald Press Company, 
1920.) 


ECONOMIC DEVELOPMENT IN AMERICA 165 

new device led to the adoption of another. Thus after 1855 reapers 
were sold as fast as they could be manufactured, and by permitting 
the harvesting of' larger areas induced the adoption of more rapid 
threshing and cleaning machines. When these were obtained, seeders 
and cultivators were a necessary sequence, and so the chase went 
merrily onward, one mechanism prompting another. In 1830, 34 
agricultural machines were patented; in 1831 the number was 38; 
in 1861, no less than 350 patents were issued; and in 1863, when 
machines took the place of war-drafted men, the number had advanced 
to 502. 

The adoption of all this agricultural machinery meant a demand 
for iron and ever more iron. Each great farm using reapers, binders, 
and the like at the same time increased the existing demand for the 
simpler tools of farming such as hand-rakes, hoes, or shovels, and 
where wood was scarce wire fences were run along boundary lines to 
set pastures off from fields and to separate one man’s holdings from 
his neighbors. 

With such a market, the iron industry strained under the pressure 
put upon it and sought to adjust itself to the fast increasing needs. 
Greater output was the immediate, prime necessity, and under this 
lash startling advances were made in mechanism. Furnaces that were 
45 feet high in 1859 were replaced by 75-foot stacks in 1872, whereat 
the world stood agape; but even these were not adequate, for by 
the time the century closed furnaces no feet high had been erected. 
The 35 tons a day output of i860 was pushed to 50 tons ten years later. 
Within five years this figure was doubled and another five years saw 
it doubled again. By 1890 the daily output was 300 tons and since 
the opening of the twentieth century the astounding amount of 1,500 
tons a day has been reached! 

Steel was as well known to iron-makers as iron itself and had 
been manufactured in small quantities since the dawn of history. 
It had been used, however, only for the finest and most costly 
articles, such as high-grade cutlery, because it was so expensive to 
manufacture. 

This riddle was solved in England by Sir Henry Bessemer. 

This process of steel-making gave the world what is wanted: 
steel made in thirty minutes, not three months, steel little more expen¬ 
sive than iron, steel many times stronger than iron. But the United 
States had to wait eight years before it could use this great industrial 
boon; lawsuits stood in the path of progress. In 1856 when Bessemer 


i66 


THE WORKER IN MODERN ECONOMIC SOCIETY 


tried to patent his process in the United States he found that a William 
Kelly had made an independent discovery of the same idea and 
that Kelly claimed priority, a claim that was sustained. Naturally 
the two contestants were forced to consolidate, the event occurring 
in 1866. Fees and royalties were reduced in consequence and America 
began a belated use of the much-sought steel. 

By 1897 however railroads and structural engineers found that 
they must use a better steel than Bessemer, so they turned to open- 
hearth. Between 1899 and 1904 the amount of open-hearth steel 
used for rails surpassed that made by the Bessemer process, and 
never again can the United States go back to the cheaper material. 
Indeed the Bessemer process is now often but one step in the produc¬ 
tion of open-hearth, for by combining the two methods the time 
necessary for the production of open-hearth is decreased a third and 
necessarily the cost is lowered. 

The last half of the nineteenth century therefore witnessed rapid 
changes in the iron and steel industry; not only were there new 
enlarged furnaces, new ores, and new fuel, but there were also two 
new products, Bessemer and open-hearth steel. These changes were 
accompanied by changes in organization, for a great wide market 
induced large-scale production and this in turn paved the way for 
integration. 

The same groups of men that owned rolling-mills in i860 engaged 
ten years later in pig iron production, but under different corporate 
organizations. Likewise, a community of interest but not a physical 
connection, still later existed between fuel- and ore-producers on the 
one hand, and iron-makers on the other. When these separate 
corporations first started, they had many a desperate struggle to 
survive, not because a market was lacking but because it expanded 
at such a prodigious pace that the many necessary extensions of the 
plants caused the capital of the promoters to assume fixed forms. 
Consequently it was an advantage to keep each unit individualized 
despite the fact that all units belonged to the same persons, for as 
separate organizations, the units could create capital for each other 
by issuing notes that might be discounted at banks. For example, a 
furnace company, a rolling-mill, and a bridge plant might all belong 
to the same set of shareholders but the rolling-mill could issue notes 
to the furnace company and the bridge plant to the rolling-mill; the 
notes discounted for cash were so many additions to working capital. 
This method of keeping each other afloat would be denied to the 


ECONOMIC DEVELOPMENT IN AMERICA 


167 


three corporations if they amalgamated as one complete unit, because 
a firm cannot discount its own notes without some other indorsements. 

Twenty years after the Civil War, the iron industry had become 
firmly enough established to eliminate the use of credit in the manner 
just indicated. As soon as capital was more fluid, the inefficiency of 
keeping apart related plants became apparent; the intercompany 
profits and royalties were sources of annoyance and where plants were 
controlled by a few interested persons holding a majority of the 
stock, injustices to minority stockholders caused trouble. There¬ 
fore the various parts of the iron industry commenced to coalesce; 
rolling-mills absorbed furnace companies and amalgamated *with 
fuel-producers. After a start in this direction, its economy and the 
consequent control of the market it afforded promoted further integra¬ 
tion, so steel companies reached out for ore fields and then sought 
ownership of the transportation agencies. 

When all the various stages of production from mining of the ore 
to finished rails, beams, or plates were unified under one authority, 
there followed an attempt to bring into the combine even the most 
important secondary producers, such as wire mills, tube factories and 
the like. This, in brief, has been the history of the Carnegie com¬ 
panies, the United States Steel Corporation, and, to a less degree, that 
of smaller aggregations. Big integrated corporations were a response 
to national and international markets. It is probably a fact that a 
great corporation like the United States Steel is as truly an evolution 
as that a national state grows from city principalities. 


See also Selection 4 a } chapter v: The Great Inventions. 


C. A Typical Industrial Case 
6. THE BOOT AND SHOE INDUSTRY 

a) THE STAGES OF GROWTH 

According to Blanche Evans Hazard, in The Organization of the 
Boot and Shoe Industry in Massachusetts before 1875, 1 from which the 
citations below are adapted, the development of the industry in 
Massachusetts, its main American center, can be traced through 
certain fairly definite stages roughly corresponding to the changes in 
business organization which had been taking place in England. Her 

1 (Copyright, Harvard University Press, 1921.) 



i68 


THE WORKER IN MODERN ECONOMIC SOCIETY 


classification is given below. It will at once be recognized that the 
lines of demarcation between stages were not clear-cut, that there 
has been much overlapping between them and that the stages repre¬ 
sent simply the most outstanding characteristics of their respective 
periods. Note that “modern” manufacture dates from about 1855. 

I. The Home Stage, in which the farmer-pioneer and his older 
sons made up in the winter around the kitchen hearth the year’s 
supply of boots and shoes for the family, out of leather raised and 
tanned on their own or their neighbor’s farm. In the less settled 
districts this method of securing footwear doubtless was continued 
until well into the nineteenth century. In thickly settled communi¬ 
ties it was succeeded quite early (1654 in at least one case) by 

II. The Handicraft Stage, in which the author distinguishes two 
phases: (a) “ bespoke ” work, or work done for a market on the specific 
demand of a definite customer, and (b) extra sale work, which involved 
making boots and shoes for stock. The transition from one to the 
other was gradual, and no year can be fixed which would be at all 
significant. A large proportion of these handicraftsmen came direct 
from England, bringing, with them the traditions and legends of the 
craft, thus influencing the spirit of the industry for many years. 
Although this method of making shoes continued far into the nine¬ 
teenth century, it can be regarded as the characteristic type of pro¬ 
duction in the larger settlements up to about the time of the 
Revolution. 

III. The Domestic Stage, characterized by a putting-out system 
similar in general form to the corresponding organization in England. 
Its period was roughly from 1760 to 1855. Here again the author 
distinguishes separate phases (1) in which the domestic worker, 
although hired by a capitalist entrepreneur, still made the complete 
shoe, (2) marked by specialization in processes and the rise of a 
“central shop” and (3) marked by the growth of capital and markets, 
the growth of distinct boot and shoe centers, and the tendency of 
the entrepreneur to make shoe-making and selling his sole business 
instead of a side venture. The first phase was greatly stimulated 
by Revolutionary War sales, the demands of trade following the war, 
and a protective tariff. During the second phase the industry grew 
even more prosperous, aided by the development of new markets in 
the south and west and even in the West Indies and South America. 
It ended in a slump with the panic of 1837. As only the stronger 
manufacturers were able to regain their feet in the period which 


ECONOMIC DEVELOPMENT IN AMERICA 169 

followed, this slump meant a further concentration of control in fewer 
and larger establishments, which paved the way for the factory system 
to follow. 

IV. The Factory Stage. “The Factory Stage did not come into 
existence in the boot and shoe industry because, as it is commonly 
supposed, the central shop was replaced by a larger building called 
a manufactory or factory, nor because of the installation in it of 
heavy expensive machinery, nor the use of power to run it, but because 
industrial organization, in order to secure uniformity of output, 
economy of time, labor and stock, demanded foremen to superintend, 
and regular hours of steady work on the part of men and women em¬ 
ployed in all of the processes of shoemaking.” The first phase— 1855- 
1 875 —was marked by central supervision, the introduction of steam 
power, and the McKay sewing-machines. Like the second phase of 
the Domestic Stage, this period was characterized by a boom, during 
and after the Civil War, followed by a slump and a period of recupera¬ 
tion marked again by change and concentration of ownership. The 
second phase— 1875 to date—has been marked by more intensive and 
larger scale production, the use of the Goodyear Welt machine, with 
consequent further alteration of processes, more acute competition, 
with ever-increasing variety of styles in attempts to capture the market, 
and greater attention throughout to economies in organization, the use 
of by-products and the like; the familiar story of the results of modern 
market conditions. 

b) CHARACTERISTICS OF THE EARLY INDUSTRY 
i. The Handicraft Stage , Brookfield, 1798 {Hazard, p. 21) 

The inhabitants were all husbandmen. Even the few mechanics 
who wrought at their trades merely to supply town customers were 
farmers upon a larger or smaller scale. There was not more than a 
single mechanic whose wares were purchased abroad; while we were 
wholly dependent upon other places for most kinds of mechanical 
business no less than for merchandise. The population of the precinct 
of North Brookfield was about eleven hundred, nor did it vary essenti¬ 
ally for nearly thirty years. The forge and the mills on Five Mile 
River were the main business centres, and Salmon Dean had a tannery 
in Spunky Hollow. Francis Stone had another tannery at Waits 
Corners, while David Thompson and Daniel Weatherby had a tan 
yard opposite the East Hill place. The town supported four 
carpenters, but every thriving man could hew, mortice, and lay 




170 


THE WORKER IN MODERN ECONOMIC SOCIETY 


shingles. The cobblers of that day were Ezra Richmond, who had a 
small shop in the east part of the town; Malachi Tower, who lived in 
the old Dempsy house; Thomas Tucker and Abiel Dean who had 
benches in their kitchens, but used to go round to the farmers’ houses 
in the fall with their kit and stay a week or so, mending and making 
the family supply of shoes. 

ii. Work for Wholesale , 1811 ( Hazard, p. 22) 

“Mr. Micah Faxon was probably the first person that manu¬ 
factured shoes for the wholesale trade in the town of North Bridge- 
water. He came from Randolph in 1811 and commenced cutting and 
making shoes in the house that was formerly occupied by the late 
Matthew Packard, and on the same lot where Mr. Faxon’s house now 
stands. At that time there was no one in town that could bind the 
vamps and put the shoes together, and they were sent to Randolph to 
be made. At first he made one hundred pair of fine calf spring-heel 
shoes and carried them to Boston on horseback. His first lot was sold 
to Messrs. Monroe and Nash, a firm on Long Wharf, Boston, who 
were among the first to send goods to the South. When carriages 
came into common use, he carried his shoes into the city in wagons 
and brought out his own leather. The market-men and those that 
carried wood and other goods to market, used to bring out stock for 
him, which, of course, was in small lots at first.” 

Hi. Three Generations of Shoemakers ( Hazard , pp. 138-39) 

In the Leach family, three generations of shoemakers spanned 
three periods of the boot and shoe industry. Levi, living and work¬ 
ing under the Custom Stage, succeeded by his son, George Martin, 
who lived through Custom and Domestic into the Factory Stage, 
had a grandson, George Myron Leach, who learned in the Domestic 
Stage and worked in factories until after 1889. Their story is prob¬ 
ably so typical of eastern Massachusetts that it can be used here as 
an illustration of the trend of the times and trade. 

Levi Leach (born 1775 in Halifax, Massachusetts) was a farmer in 
South Bridgewater who taught school in winter and made shoes in a 
ten-footer, which he built in his “side front yard.” His work was 
custom work. Where he himself learned the trade is not remembered, 
but knowing conditions in the Bridgewater regions during his youth 
and early manhood would make us wonder if he had been an itinerant 
cobbler, like Paul Hathaway, who settled down in his own shop and 
began custom work. This Levi Leach, besides teaching school three 


ECONOMIC DEVELOPMENT IN AMERICA 


171 

months each year, taught his three sons, George, Levi, and Giles, to 
make shoes. When the eldest son, George Martin (born 1821), was 
twenty-one, he went to East Middleboro and repeated his father’s 
program in buying a farm and farming it, building a ten-footer in his 
orchard near the street, and teaching the village school three months 
a year. The work in his shop, however, was of the custom sort. 
He was soon buying stock, cutting it up, both sole and upper leather, 
for brogans and Oxfords, and sending the uppers out to women in 
the neighborhood to bind and side up. After this work was brought 
back to his ten-footer, which now had become a central shop, the 
uppers were inspected and sent out to be bottomed in various ten- 
footers in the near neighborhood or by people “down Plymouth way.” 
By the time his younger son, George Myron (born 1845) was seven 
years old, George Martin Leach had outgrown his ten-footer, and had 
been taken into partnership by Deacon Eddy of East Middleboro, who 
already had a successful grocery business and the post-office on the 
lower floor of his two-story square building. Deacon Eddy put into 
the venture $10,000 which he had made in the shovel business, and 
Leach put in only $200 in cash, but brought knowledge and experi¬ 
ence of the manufacturing of shoes. Their business was largely in 
brogans for the Southern trade, mainly for New Orleans. The second 
story of the Eddy building was used for their central shop. Here 
both sons, George Myron and Giles, learned the trade, pasting linings 
in brogans, then closing seams. The stint for a twelve-year old for a 
Saturday forenoon was to side up ten pair of brogans, using barrel 
staves for clamps. By the time George was old enough to understand 
machinery, his father’s firm had invested in a stitching machine for 
uppers and George Myron and his brother Giles had full charge of 
the stitching in a small fourteen by fourteen ell added to the back of 
the building. 

By i860, when Deacon Eddy was ready to retire from the firm, the 
Eddy and Leach central shop was becoming a factory where most of 
the bottoming as well as the cutting and crowning was being done 
under supervision in the shop. Leach kept up the firm until 1874, 
but instead of competing with other manufacturers who were buying 
and installing expensive machinery, he became more and more a 
jobber, buying up and selling shoes already made. Meanwhile both 
sons, George Myron and Giles, had moved to Raynham and were 
working in shoe factories there and in Brockton as stitchers, George 
keeping it up until 1889. 


172 


THE WORKER IN MODERN ECONOMIC SOCIETY 


c) CHANGES IN MACHINERY AND PROCESSES 
i. Before 1830 {Hazard, pp. 3-4 ) 

The tools and processes of shoemaking in all countries and ages 
prior to 1830 were few and easily mastered. Skill and good materials 
made excellent shoes fit for a princess; but the same tools and processes 
were useful for making the crudest shoes such as mediaeval serfs wore. 
From time immemorial, there have been 2 parts to a shoe: an upper 
and a sole; 4 processes in making a shoe: cutting, fitting, lasting, 
bottoming; 8 tools necessary for making a shoe: knife, awl, needle, 
pincers, last, hammer, lapstone, and stirrup. 

These four processes could be performed adequately with just 
those eight tools by any frontier farmer in his colonial kitchen. From 
1620 up to 1830, there were no machines for preparing leather, nor 
for making shoes in Massachusetts, or anywhere. A lapstone and a 
hand-made hammer were used for pounding the leather; a single 
knife for cutting both sole and upper leather. An awl to bore holes, 
and a needle or a bunch of bristles were necessary for sewing the 
shoes. This process was called fitting, and consisted of sewing the 
parts of the upper together. When the upper was fitted, it was 
slipped on the last, which had an insole tacked to it, and its lower 
edge pulled over this wooden form tightly with pincers until it could 
be fastened temporarily with nails. Then the outer sole was either 
sewed or pegged on to this lasted upper. The last in the shoe was 
meanwhile held firmly in place by a strap or stirrup, which passed 
over it and down between the shoemaker’s knees where the shoe 
rested, and was held taut under his left foot. 

ii. The Coming of Machinery, 1840 {Hazard, pp. 93-94) 

Up to about 1840, the shoemaker had used mainly just such tools 
as had been used for centuries. Then there came a little skiving 
machine, run by hand, and not very satisfactory to the older men, 
accustomed to skiving with a regular knife. The next machines 
to be invented for boot and shoe work were the stripper, for cutting 
up sides of sole leather, and a leather-rolling machine, which came 
in 1845 to save both time and strength formerly used in hammering 
the sole leather on a lapstone. 

Because the market was already making hints if not demands as 
to styles instead of accepting quietly anything the shoemaker provided, 
the use of different shapes and widths of block lasts came in the early 
4o’s. Shoemakers no longer depended upon “instep leathers” for 


ECONOMIC DEVELOPMENT IN AMERICA 


173 


making “fulls” and “slims.” Substantial patterns came into use. 
Sole patterns which gave uniformity of shape and width at ball and 
shank, and patterns for rounding the soles after they were stitched, 
were invented. Irons for polishing the edges came into use. Heels 
were put on women’s shoes again, and men began to specialize in 
heeling. Several styles of pegging machines, and a machine for cutting 
up pegs had been patented and put in general use by the time the 
sewing machine, invented by Howe in 1846, had been adapted to 
upper leather work on shoes by John Brooks Nichols in 1852. There 
was the “dry thread” machine with a shuttle and two threads for 
the lighter upper work, and the “wax thread” to do chain stitching 
for the heavy work of “siding up” bootlegs. These sewing machines 
even then impressed people with their significance. Instead of merely 
making things easier or a “bit more speedy,” they produced work 
which could not be matched by hand in either speed or appearance. 

in. Processes , 1920 {Hazard, pp. 159-60) 

Of the 100 or more operations of a modern factory, more than 50 
may be performed by machines. The number of operations, both 
hand and machine, varies with the process and product and the equip¬ 
ment of the factory. These operations are listed and briefly described 
in a bulletin of the United States Department of Labor on Wages and 
Hours of Labor in the Boot and Shoe Industry. No attempt has been 
made to explain or paraphrase them. They are given to present in 
bold relief a picture of the complexity of modern shoe making in con¬ 
trast with the simplicity of the early craft. 

The occupations for which data are shown are here listed in alpha¬ 
betical rather than process order, under each department. The 
departments, however, are listed in process order. 1 

1 This classification, in conjunction with the preceding paragraphs, should 
give a vivid sense of the specialization which the machine and modern organization 
have brought with them. Census classifications do not permit any estimate of 
the number of “jobs” which exist in modern industry, and such a classification is 
probably impossible. Schmoller, in the Jahrbuch fiir Gesetzgebung, Verwaltung und 
Volkswirtschaft, XIII, 1045 (quoted in Weber, The Growth of Cities, p. 175), gives the 
following suggestive estimate of the numbers of “trades” practised in ancient, 
medieval, and modern times in various places: Rome, 10-20; Greece (337 a.d.), 35; 
Frankfort (1387), 148; Frankfort (1440), 19U Frankfort (1500), 300; China (1890), 
350; Germany (1882), 4,785. The number of diverse occupations in modern 
America is of course infinitely greater. This fact should carry with it a realization 
not only of the change in the character of the workman’s task but of the compara¬ 
tive complexity of the problem of co-ordinating specialisms in modern society, 
both in the individual establishment and in the economic organization as a whole. 
Recall in this connection Selection 56, chapter v: The Iron Man. 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Cutting department: 

Cutters, lining, cloth, male 
Cutters, vamp and whole shoe, 
hand, male 

Cutters, vamp and whole shoe, 
machine, male 

Skivers, upper, machine, male 
Skivers, upper, machine, female 
Sole-leather department: 

Channelers, insole and outsole, male 
Cutters, outsole, male 
Fitting or stitching department: 
Backstay stitchers, female 
Button fasteners, female 
Buttonhole makers, female 
Closers-on, female 
Lining makers, female 
Tip stitchers, female 
Top stitchers or undertrimmers, 
female 

Vampers, male 
Vampers, female 
Lasting department: 

Assemblers, for pulling-over ma¬ 
chine. male 


Bed-machine operators, male 
Hand-method lasting-machine 
operators, male 
Pullers-over, hand, male 
Pullers-over, machine, male 
Bottoming department: 

Buffers, male 
Edge setters, male 
Edge trimmers, male 
Goodyear stitchers, male 
Goodyear welters, male 
Heel breasters, male 
Heel burnishers, male 
Heelers, male 
Heel scourers, male 
Heel-seat nailers, male 
Heelsluggers, male 
Heel trimmers or shavers, male 
Levelers, male 
McKay sewers, male 
Rough rounders, male 
Finishing department: 

Treers or ironers, hand, male 
Treers or ironers, hand, female 


d) CAPITAL INVESTED, OUTPUT, AND NUMBER OF WORKERS 

EMPLOYED 

i. i860 {Hazard, pp. 112-13) 

Lynn shoe manufacturers had also been active in building sub¬ 
stantial new factories of brick or wood. A ten-hour system had gone 
into effect and bells ringing at 6:00 p.m. put an end to the working 
day. By the returns of the United States Census of i860, Lynn was 
manufacturing boots and shoes to a higher value ($4,750,000) than 
any city in the United States except Philadelphia, whose output a 
year was valued at $5,500,000. Haverhill was a close third with a 
value at $4,000,000. These three cities, together with New York 
City, made one-fifth of the total value of shoes and boots in the United 
States in i860. This total was given in the Report on Boot and Shoe 
Manufacture as $91,891,498. To produce boots and shoes to this 
value 123,029 persons were engaged in different parts of the United 
States, working in 12,487 establishments, and using a capital of 


ECONOMIC DEVELOPMENT IN AMERICA 


175 


$23,358,527. They consumed that year raw materials worth 
$42,729,649. This total product of the boot and shoe industry in 
the United States was 70 per cent above that of 1850. New England’s 
share in the number of establishments devoted to this shoe industry 
was 2,439. 

The New England boot and shoe shops and factories gave employ¬ 
ment to nearly $11,000,000 of capital out of the twenty-three millions 
invested in the shoe industry throughout the United States. They 
employed 52,010 males, and 22,282 females, out of the total of 123,029 
employed in the whole United States in boot and shoe making. The 
product of their labor was $54,818,148, or nearly 60 per cent of the 
whole value of boot and shoe making in the whole country. The 
average value of boots and shoes made in each of the New England 
establishments was $22,475 P er year. 


it. 1914 1 

Number of establishments. 1,960 

Wage-earners. 206,088 

Capital invested. $297,609,000 

Value of products. $590,028,000 

Hi. Comparisons between i860 and 1914 

Average capital invested per establishment, i860. $ 1,8oof 

Average capital invested per establishment, 1914. $125,500f 

Average workers per establishment, i860. 10 

*Average workers per establishment, 1914. 105 

Output per worker, i860. $ 74 °t 

*Output per worker, 1914.. $ 2,383! 

* Wage-earners only. 


t Allowance made for change in price levels based on the chart in Professor H. G. Moulton’s 
Financial Organization of Society, p. 31. According to this estimate $1.00 in i860 was equal in value 
to approximately $1.20 in 1914. 

D. Modern American Occupational Groups: A Statistical 

Analysis 

[Note. —For convenience in reference the statistical data which 
illustrates and supplements the preceding material of this chapter has 
been concentrated mainly in this part. It should serve to make 
more concrete much of the foregoing discussion, at the same time 
adding much significant detail. The main purpose of the section is 

1 Taken from Statistical Abstract of the United States , 1920. 












176 


THE WORKER IN MODERN ECONOMIC SOCIETY 


to present statistically a picture of the changes which have taken 
place in the economic organization of the United States within the 
past forty years, and to give a rough impression of the character of 
the specialists who take part in the present national scheme of 
production.—E d.] 

7. ECONOMIC CLASSES IN THE UNITED STATES 1 

If all the urban wage-earners of the United States were to unite 
politically, would they constitute an overwhelming majority ? What 
is the relative numerical strength of industrial wage-earners as com¬ 
pared to business proprietors and officials? What is the relative 
industrial and political strength, numerically, of the rural population ? 
Under the existing industrial organization, how much room is there 
at the top? What opportunity is there for the average individual 
to rise to a position of comparative independence as proprietor, execu¬ 
tive official, or professional person? In short, what proportion of 
the gainfully employed persons in the United States is compelled by 
the existing structure of industrial society to remain in the wage¬ 
earning class? Who is the “public” so far as industrial disputes are 
concerned, and how large is this class? In the conflicts that are 
forming on the basis of industrial class alignments, what is the max¬ 
imum strength that the various groups may hope to muster ? 

It was found feasible to group all gainfully employed persons as 
reported in recent census volumes into the following main classifica¬ 
tions: (1) farm laborers, (2) farmers, (3) proprietors and officials, 
(4) professional class, (5) lower salaried employees, (6) servants, 
(7) industrial wage-earners, (8) unclassified. 

The designation “farm laborers” includes members of the family 
working on the home farm and laborers working out. This differ¬ 
entiation is made, however, only in the two censuses of 1910 and 1900. 
In 1910 the “home” laborers constituted 53.9 per cent of all farm labor¬ 
ers, and in 1900, 53.7 per cent. It was assumed that approximately this 
ratio obtained in the earlier decades as well, and the number of “ home ” 
laborers was therefore estimated by taking 53.8 per cent of the total 
number of farm laborers. Fifty-four per cent of all farm laborers in 
1900 were under 21 years of age. It thus appears that the laborers 

1 Adapted with permission from Alvin H. Hansen, “Industrial Class Align¬ 
ments in the United States,” American Statistical Association Quarterly, December, 
1920, pp. 417-22. (American Statistical Association, Publishers, New York.) 


ECONOMIC DEVELOPMENT IN AMERICA 


177 


working on the home farm are children of farmers not yet of age, 
while the laborers working out are very largely adults. 

“Farmers” includes farmers, planters, dairymen, stock raisers, 
herders, drovers, and feeders. For the year 1910, gardeners, florists, 
fruit growers, and nurserymen are also included. The latter groups 
were for the earlier periods relegated to the unclassified group because 
the reports for those years do not distinguish between proprietors and 
laborers. “Farmers” includes both farm owners who farm their own 
land and tenants. In 1880 about 75 per cent owned their land, while 
in 1910 only 63 per cent were owners of the land operated. 

“Proprietors and officials,” as the designation is here used, 
includes manufacturers and officials; proprietors, officials, and man¬ 
agers; transportation officials and superintendents; mining operators, 
officials, and managers; mechanical engineers; officials of banks and 
other companies; bankers and brokers; real estate and insurance 
agents; commercial travelers; merchants and dealers at retail and 
wholesale; auctioneers; undertakers; jewelers (not workers); livery 
stable keepers; garage keepers and managers; proprietors and man¬ 
agers of transfer companies; hucksters and peddlers; hunters and 
trappers; saloon keepers; restaurant keepers; hotel keepers; and 
boarding-house keepers. 

The “professional class,” for the purpose of this classification, is 
used in a broad sense and includes not merely the groups regularly 
referred to as professional, but also untrained nurses and such public 
service groups as detectives; sheriffs; marshals; policemen; officials 
and inspectors of municipalities, counties, states, and the federal 
government; soldiers, sailors, and marines; and life-savers. 

The “lower salaried employees” class includes foremen and over¬ 
seers, clerks and copyists, stenographers and typewriters, bookkeepers 
and accountants, agents and collectors, inspectors and samplers, 
demonstrators, sales agents, ticket and station agents, xpress agents, 
baggage men and freight agents, mail carriers, chauffeurs, house-keepers, 
and stewards. 

The “unclassified” group includes, in part, groups referred to in 
the census reports under some indefinite designation such as “other 
pursuits.” Much the greater portion of this group, however, is 
composed of occupations for which the designation does not distinguish 
between proprietor and workman, such as watchmaker, milliner, 
launderer, shoemaker, brewer, distiller. From 60 to 80 per cent is 
composed of master and journeymen trades, in which it is impossible 


178 THE WORKER IN MODERN ECONOMIC SOCIETY 


to distinguish between proprietor and workman, such as barbers, 
bakers, blacksmiths, butchers, painters, paperhangers, plasterers, 
plumbers, and tailors. It is to be noted, therefore, that this “ unclassi¬ 
fied” group would, if accurate classification were possible, fall very 
largely in either the proprietor class or the industrial wage-earning 
class. In all probability the proportion of entrepreneurs in this 
unclassified group is somewhat greater than the ratio obtaining 
between the designated proprietor and official class and the industrial 
wage-earning class. Especially is this true of the earlier decades for 
the reason that specialization and large scale production had not yet 
fully developed. For the same reason the occupation designations 
prior to 1910 necessarily distinguish less clearly among employers, 
employees, and persons working for themselves. Not only is the 
unclassified group larger, therefore, in the earlier periods, but—and 
perhaps this is of still greater importance—the proportion of entre¬ 
preneurs and proprietors to wage-earners is also larger in the earlier 
decades. The net effect is that the number given in the proprietor 
and official group in the following table is something of an under¬ 
statement, particularly for the earlier census periods. 

“Industrial wage-earners” includes all wage-earners except 
servants, farm laborers, and that portion of the wage-earning class 
which falls for lack of clear census designation into the unclassified 
group. 

The number of gainfully employed persons falling into each of 
the classifications just described is given in Table VI. The percentage 
distribution is given in Table VII. It will be noted that the proprietor 
and official, professional, salaried, and wage-earning groups have 
steadily become more important relatively. Servants have declined 
in relative numerical importance. Farmers held their own until after 
1890 and then upon the disappearance of free land rapidly declined. 
The percentage of farm laborers decreased rapidly until 1890, which 
indicates that while free land could be obtained a larger and larger 
proportion of our agricultural population were becoming independent 
farmers. Since 1890 the proportion of the rural population that are 
farm laborers has been rapidly increasing. There also appears to be 
some increase in the farm labor class as compared to the total gain¬ 
fully employed population. However, because of inadequate instruc¬ 
tions to enumerators, earlier censuses do not give so complete returns 
for farm laborers as does the 1910 census. From 1900 to 1910 there 
was probably a slight decrease (instead of the apparent slight increase 


ECONOMIC DEVELOPMENT IN AMERICA 


179 


indicated) in the proportion of farm labor to the total gainfully 
employed population. 

TABLE VI* 


Groups 

1870 

1880 

1890 

1900 

1910 

1920 

Farm laborers. 

Farmers. 

Proprietors and officials 
Professional. 

2,885,996 

3,000,229 

581,378 

4x4,708 

309,413 

975,734 

3,328,351 

1,010,114 

3,323,876 

4,282,074 

807,049 

666,338 

529,473 

1,075,655 

5,286,829 

1,420,795 

3,004,061 

5,370,181 

1 , 347,329 

1,114,507 

965,852 

1 , 454,791 

7,360,442 

2,118,498 

4,410,877 

5 , 770,738 

1,811,715 

1,565,686 

1,329,928 

1 , 453,677 

10,263,569 

2,467,043 

6,143,998 

6,229,161 

2,879,023 

2,074,792 

2,393,620 

1,572,225 

14 , 556,979 

2 , 317,538 

4,178,637 

6,463,708 

3,168,418 

2,760,190 

3,985,306 

1,270,946 

1^648,072 

Ti 38 , 97 i 

Lower salaried. 

Servants. 

Industrial wage-earners 
Unclassified. 

Total. 

12,505,923 

17,392,099 

22,735,661 

29,073,233 

38,167,336 

41,614,248 


TABLE VII* 


Groups 

1870 

1880 

1890 

1900 

1910 

1920 

Farm laborers. 

23.1 

19.1 

13-2 

15-2 

16.1 

10.0 

Farmers. 

24.0 

24.6 

23.6 

19.8 

16.3 

15-5 

Proprietors and officials. 

4.6 

4.6 

5-9 

6.2 

7-5 

7.6 

Professional. 

3-3 

3-8 

4.9 

5-4 

5-4 

6.6 

Lower salaried. 

2-5 

3-0 

4-3 

4.6 

6.3 

9.6 

Servants. 

7.8 

6.2 

6.4 

5 -o 

4.1 

31 

Industrial wage-earners. 

26.6 

30.4 

32.4 

35-3 

38.2 

42.4 

Unclassified.. 

8.1 

8.2 

9-3 

8.5 

6.0 

5-1 


* Professor Hansen’s original analysis extended only through the 19x0 census. In a note in 
the December, 1922, issue of the Journal of the American Statistical Association, however (pp. 503-6) 
he carries the study through the 1920 census. His figures for 1920 have therefore been incorporated in 
Tables VI and VII. His comment on changes for 1920 follows in part: 

“ The number of farm laborers has enormously decreased, both absolutely and relatively. This is 
explained in the 1920 census bulletin on occupational statistics as follows: First, the change in the census 
date from April 15 to January 1 tended to reduce the number of agricultural laborers for two reasons: 

(1) fewer laborers were employed in agriculture at that season and hence many laborers who would 
have been employed as farm laborers in April were returned in January under some other occupation: 

(2) children living on the home farm were in many cases not returned as either gainfully employed or 
attending school, whereas had the census data been for April instead of January they would doubtless 
have been returned as gainfully employed. In the second place the war resulted in a considerable 
transfer of labor from the farms to the factories. For these reasons it can scarcely be doubted that the 
figure for agricultural laborers for 1920 is an understatement. On the other hand the 1910 figure for 
farm laborers is an overstatement compared to the figures given in the earlier census reports. At all 
events it appears clear that the proportion of farm laborers to the total gainfully employed is not 
increasing and is probably no greater now than it was in 1890. This is striking, in view of the dis¬ 
appearance of free land and the increasing expense of setting up as independent farmers. The explana¬ 
tion no doubt lies in the increasing industrialization of the country with the consequent drain of 
labor to the cities.” 


Increasing industrialization . 1 —The increasing industrialization of 
the country and the relatively declining importance of agriculture are 
indicated in Table VIII. Here the gainfully employed population is 

1 “There was a considerable absolute decrease in the servant class and a very 
great relative decrease from 1910 to 1920. This is in line with a steady decline 
since 1870. This decrease is however more apparent than real. Personal service 
work has increasingly become industrialized. A large part of the work which was 
done in the home in 1870 was done outside of the home in 1920. The preparation 
of food is a case in point. 

“In the farming class there was a slight absolute increase but a slight relative 
decline. The professional class continued the steady increase it has shown since 

























































i8o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


grouped under three categories, if we omit from our consideration 
that portion designated as unclassified. The first group includes the 
proprietors and officials, the lower salaried and professional classes. 
It is the “white collar” urban population, not all even moderately 
well circumstanced, but constituting on the whole the middle and 
upper urban class. The second group is composed of all gainfully 
employed agriculturists—the farmers, tenants, and farm laborers. 
This group represents what remains of the old type of American 
individualists. The industrious and frugal tenant in most cases still 
becomes in time, though with increasing difficulty, a farm owner. 
The farm laborer, with the exception of the relatively small migratory 
class, hopes to save enough to set up as an independent tenant. 
Getting on is still largely a matter of individual push and initiative. 
True, the problems of organization and control of markets loom larger 
and larger, but the road to independence and advancement is still 
open even though it is not so easy and broad as before. The third 
class is composed of urban workers—the industrial wage-earners and 
servants. They are for the most part shut up in the wage system. 
If they are to better their condition they must do so not by way of 
escape to something else, but by improvement of their lot as wage¬ 
workers. 

The farming group is being increasingly cut into on one side by 
the business, salaried, and professional group, and on the other side 
by the industrial wage-earners. The relative growth of the former 
group would seem to be a healthy sign, but it should be noted that a 
large part of this growth, nearly a half in fact, is due to the rapid 
increase of the lower salaried employees whose position is certainly 
not very desirable. Further than that, not only is the rural group 
declining in relative importance, but within that group itself the 
opportunities for advancement are narrowing down, as has already 


1870. Proprietors and officials, lower salaried, and industrial wage-earners—all 
subject to the influence of increasing industrialization—show increases quite similar 
to those previously registered. The lower salaried class especially has been growing 
in importance, increasing nearly 40 per cent relatively to other classes from 1900 
to 1910, and over 50 per cent from 1910 to 1920. The percentage increase in 
industrial wage-earners is as follows: 


1870 to 1880. 14.3 

1880 to 1890. 6.6 

1890 to 1900. 9.0 

1900 to 1910. 8.2 

1910 to 1920. n .1”—Hansen, op. cit. 








ECONOMIC DEVELOPMENT IN AMERICA 181 

been shown, because of the encroachment of tenants and farm laborers 
upon the farm owning class. 


TABLE VIII* 


Groups 

1870 

1880 

1890 

1900 

1910 

Urban upper and middle. 

Rural. 

10.4 

47 -i 

34-4 

8.1 

11 .4 

43-7 

36.6 

8.2 

151 

36.8 

38.8 
9-3 

16.2 
35 -o 

40.3 
8-5 

19.2 

32.4 

42.3 

6.0 

Urban workers. 

Unclassified. 


*“Tbe ‘urban upper middle’ classes, including the proprietors and officials, professional and 
lower salaried groups, have increased from 19.2 per cent of the total gainfully employed in 1910 to 23.8 
per cent in 1920. The ‘urban workers,’ including the industrial wage-earners and the servant groups, 
have increased from 42.3 per cent in 1910 to 45.5 per cent in 1920. On the other hand the ‘rural 
group,’ including farmers and farm laborers, has decreased from 32.4 per cent in 1910 to 25.5 per cent 
in 1920.”—Hansen, op. cit. 

Industrial independence .—Yet in spite of these tendencies it is 
surprising to find what a large proportion of the gainfully employed 
population are business men, farmers, and professional men. Table 
IX shows that in 1910 about 38 per cent still belonged to this inde¬ 
pendent class. Disregarding again the unclassified, the gainfully 
employed population is here placed in two groups. One group is 
composed of the business and professional classes, farmers, and the 
children of farmers. The latter, of course, expect to become inde¬ 
pendent farmers upon reaching maturity, and hence, while listed as 
laborers, from the standpoint of this classification they may properly 
be classed with the farmers. This, then, is the industrially inde¬ 
pendent group, independent not so much from the standpoint of 
income as from the‘standpoint of being one’s own boss. 

The second group is composed of the rural and industrial wage- 
earners and the lower salaried employees. No doubt some of this 


TABLE IX 


Groups 

1870 

1880 

1890 

1900 

1910 

Proprietary and independent.... 

44-3 

43-3 

4 i -5 

39 - 6 

37-9 

Rural and urban working. 

47.6 

48.4 

49.2 

51-9 

56.0 

Unclassified. 

8.1 

8.2 

9-3 

8-5 

6.0 


group receive incomes in excess of many farmers, and even of pro¬ 
fessional and business men. But their outlook is different because of 
their place in the industrial system. The old type of American 
industrial ideals, based on individual proprietorship and industrial 
independence, may be expected to hold sway—so far as the former 




































182 


THE WORKER IN MODERN ECONOMIC SOCIETY 


group is concerned. But the old slogans do not fit the life of the 
latter group, and the old appeals cannot be expected in the long run 
to be successful. This is by no means saying that it is a homogeneous 
group or that any one type of appeal can be made to all. 


See also Selection 8 b, chapter v: Shifts in Occupational Groups. 
8 . A CLASSIFICATION BY SEX 


a) TABLE X* 

Number and Percentage of Persons Engaged in Gainful 
Occupations for Each Census from 1880 to 1920 


Sex and Census Year 

Population Ten Years 
of Age and Over 

Persons ten Years of Age and Over 
Engaged in Gainful Occupations 

Number 

Percentage 

Both sexes: 




1920. 

82 , 739,315 

41,614,248 

50.3 

1910. 

71,580,270 

38,167,336 

53-3 

1900. 

57,949,824 

29 , 073,233 

50.2 

1890. 

47 , 413,559 

36,761,607 

23,318,183 

49.2 

1880. 

17,392,099 

47-3 

Male: 



1920. 

42,289,969 

33,064,737 

78.2 

1910. 

37,027,538 

30,091,564 

81.3 

1900. 

29 , 703,440 

23 , 753,836 

80.0 

1890. 

24,352,659 

19,312,651 

79-3 

1880. 

i 8 , 735 , 98 o 

14 , 744,942 

78.7 


* Compiled from the U.S. Census. 


b ) TABLE XI* 

Changes in the Proportion of Women Gainfully 
Employed in the United States between 
1880 and 1920 


Year 

Number Employed 

Percentage of Total 
Number of Women 
and Girls over 
Ten Years 

1880. 

2,647,000 

14.7 

1890. 

4,005 ,OOO 

17-4 

1900. 

5,319,000 

18.8 

1910. 

8,076,000 

23-4 

1920. 

8,549,000 

21 . if 


* Compiled from the U.S. Census. 

f The apparent decrease in the percentage of women gainfully employed in 1920 is not wholly 
a real decrease. Owing to a change in the method of taking the Census in 1910 the number for that 
year is greatly exaggerated. About 1,000,000 too many women working on farms were included as 
gainfully employed in that year but do not appear in the other census figures. 

For additional data on the employment of women and children, see chapters x and xxvi. 





































ECONOMIC DEVELOPMENT IN AMERICA 183 

9. A CLASSIFICATION BY RESIDENCE: 

URBANIZATION 

% 

a) TABLE XII* 

Urban f and Rural Population of the United States: 

1880-1920 


Class 

1920 

1910 

1900 

1890 

1880 

Urban. 

54,304,603 

42,166,120 

30,380,433 

22,298,359 

14,358,167 

Rural. 

51,406,017 

49,806,146 

45,614,142 

40,649,355 

35 , 797 , 6 i 6 

Total number. 

105,710,620 

91,972,266 

75 , 994,575 

62,947,714 

50,155,783 

Urban. 

5 i -4 

45-8 

40.0 

35-4 

28.6 

Rural. 

48.6 

54-2 

60.0 

64.6 

71.4 

Total per cent. 

100.0 

100.0 

100.0 

100.0 

100.0 


* United, States Census, 1920, I, 43. (Government Printing Office, Washington, D.C., 1921.) 
t By urban is meant all cities and towns over 2,500. 


b ) TABLE XIII* 


Population in Places of 8,000 Inhabitants or More, 

1790-1920 



Total 

Population 

Places of 8,000 Inhabitants or More 

Census Year 

Population 

Number of 
Places 

Percentage of 
Total Population 

1920. 

105,710,620 
91,972,266 

75 , 994,575 
62,947,714 
50 , 155,783 
38 , 558,371 
31,443,321 
23, i 9 i , 8 76 

17,069,453 

12,866,020 

9 , 638,453 

7 , 239 , 88 i 

5,308,483 

3 , 929,214 

46,307,640 

35 , 570,334 

25,018,335 

924 

43-8 

1910. 

768 

38-7 

1900. 

547 

32.9 

1890. 

18 , 244,239 

11,365,698 

445 

29.O 

1880. 

285 

22.7 

1870. 

8,071,875 

226 

20.9 

i860. 

5,072,256 

2,897,586 

141 

16.1 

1850. 

85 

12.5 

1840. 

1 , 453,994 

864,509 

44 

8-5 

1820 . 

26 

6.7 

1820. 

475, x 35 

13 

4-9 

1810. 

356,920 

11 

4.9 

1800. 

210,873 

6 

4.0 

tVoo. 

I 3 I ,472 

6 

3-3 





* United Stales Census, 1920, I, 43- 


See also Selection 8a, chapter v: Transport and the Drift to the 
Towns. 





























































184 


THE WORKER IN MODERN ECONOMIC SOCIETY 




c) TABLE XIV* 

Distribution of Population in Groups of Cities Classified according to 

size and in Rural Territory: 1890-1920 


Percentage of Total Population 


Class of Places 

1920 

1910 

1900 

1890 

Urban Territory. 

5 i -4 

45-8 

40.0 

35-4 

Places of 1,000,000 or more.. .. 

9.6 

9.2 

8-5 

5-8 

Places of 500,000 to 1,000,000. . 

5-9 

3-3 

2.2 

i -3 

Places of 250,000 to 500,000.... 

4-3 

4-3 

3-8 

3-9 

Places of 100,000 to 250,000.... 

6.2 

5-3 

4-3 

4-4 

Places of 50,000 to 100,000. 

5 -o 

4-5 

3-6 

3-2 

Places of 25,000 to 50,000. 

4.8 

4-4 

3-7 

3-6 

Places of 10,000 to 25,000. 

6.6 

6.0 

5-7 

5-4 

Places of 5,000 to 10,000. 

4-7 

4.6 

4.2 

3-8 

Places of 2,500 to 5,000. 

4-3 

4.2 

4.1 

4.0 

Rural Territory. 

Incorporated places of less than 

48.6 

54-2 

60.0 

64.6 

2,500. 

8-5 

8.9 

8-3 

7.6 

Other rural territory. 

40.1 

45-3 

Si -7 

57 -o 

Total population United States 

100.0 

100.0 

100.0 

100.0 


* United States Census, 1920, 1 , 50. 


10. CHANGES IN SIZE AND ORGANIZATION 

OF INDUSTRIES 

a) TABLE XV* 

Manufacturing Establishments in the United States, 1919, 
Classified according to Number of Wage-Earners 


Establishments, Wage-Earners, and Percentage 
of Total 


Establishments Employing 

Number of 
Establishments 

Number of 
Wage-Earners 

Percentage of Total 

Establish¬ 

ments 

Wage- 

Earners 

No wage-earners. 

27,924 


12 . I 


1 to 5 wage-earners. 

141,742 

311,576 

48.9 

3-4 

6 to 20 wage-earners. 

56,208 

631,290 

19.4 

6.9 

21 to 50 wage-earners. 

25,379 

829,301 

8-7 

9.1 

51 to 100 wage-earners. 

12,405 

888,344 

4-3 

9.8 

101 to 250 wage-earners. 

10,067 

l, 58 l ,557 

3-5 

17-4 

251 to 500 wage-earners. 

3,600 

1,251,081 

1.2 

13-8 

501 to 1,000 wage-earners. 

D 749 

1,205,627 

0.6 

13-3 

Over 1,000 wage-earners. 

1,021 

2 , 397,596 

0.4 

26.4 

Total. 

290,105 

9,096,372 

100.0 

100.0 


* Taken from the Statistical Abstract of the United States (U.S. Department of Commerce), 
1921, p. 221. 



























































ECONOMIC DEVELOPMENT IN AMERICA 


185 


b ) TABLE XVI* 


United States Mines, 1919: Percentage of Operators 
and Wage-Earners by Size of Establishments 


Number of Wage-Earners Employed 

Percentage of 
Operators 

Percentage of 
Wage-Earners 

No wage-earners. 

17-5 

37-2 


1 to 5. 

1-7 

6 to 20. 

18.6 

4-5 

21 to 50. 

IO.9 

7-7 

51 to IOO. 

6.4 

10.0 

101 to 500. 

8.2 

38.4 

501 to 1,000. 

0.9 

12.8 

Over 1,000. 

• 

0.4 

24.8 


* Taken from the U.S. Census, 19x9, volume on Mines and Quarries, p. 21. 


c) TABLE XVII* 


Manufactures: Classified According to Size of Establishment 
and Measured by the Value of Products, 
i 9 ° 4 , 1909, I 9 I 4 > 1919 


Value of Product and Year 

Establish¬ 
ments, 
Percentage 
of Total 

Wage- 
Earners, 
Percentage 
of Total 

Products, 
Percentage 
of Total 

Added by 
Manufacture 
Percentage 
of Total 

Less than 5,000: 

1904. 

32.9 

34 - 8 

35 - 2 
22.6 

1.9 

1 . 2 

1.8 

1 900. 

2 . 2 

I. I 

1 • 7 

IOI 4 . 

1.8 

1.0 

1.5 

IOIO. 

0. 

O. 5 

0.4 

5,000 and less than 20,000: 

1904. 

33-7 

32.4 

3 1 -9 

3 °- 1 

22.2 

7-7 

5 - 1 

6.7 

IOOO. 

7 • 1 

4.4 

6.0 

1014 . 

6.1 

3-7 

5.1 

1010 . 

2.7 

1 .5 

2.2 

20,000 and less than 100,000: 

1004. . 

18.8 

14.4 

i 7-3 

1000 . 

21.3 

16.5 

12.3 

14.8 


20.6 

14.2 

10.5 

12.5 

1010 . 

26.9 

8.7 

5-7 

7.0 

y y . 

100,000 and less than 1,000,000: 

1004 . 

10.3 

46.0 

4 i -3 

44.2 

1000 . 

10.4 

43-8 

42.7 

38.4 

36.2 

24.8 

41.9 

10,14 . 

11.0 

39-4 


16.9 

3 1 • 2 

25.6 

28.1 

1,000,000 and over: 

mo/i. 

•9 

38.9 

29.9 

i y v4 r . 

1000 . 

1.1 

30-5 

35-2 

43-8 

35 • 7 

x y . 

1014 . 

1.4 

48.6 

41.4 

.. 

1010. 

3.6 

5 6 -9 

67.8 

62.3 

A y A y . 




♦Taken from the Statistical Abstract of the United States (U.S. Department of Commerce), 


1921, p. 222. 




















































THE WORKER IN MODERN ECONOMIC SOCIETY 


186 


d) TABLE XVIII* 


Manufactures 1 : Classified according to Character of 
Ownership of the Establishment 
1904, 1909, 1914, 1919 


Character 

Establishments 

Wage-Earners 

Products 

Added by 
Manufacture 

of 

Ownership 

and 

Year 

Number 

Per¬ 

centage 

of 

Total 

Average 

Number 

Per¬ 

centage 

of 

Total 

Value 

in 

Dollars 

Per¬ 

centage 

of 

Total 

Value 

in 

Dollars 

Per¬ 

centage 

of 

Total 

Individual: 









1904. 

113,946 

52.7 

755,923 

13.8 

1,702,830,624 

xi -5 

824,292,887 

13.i 

1909. 

140,605 

52.4 

804,883 

12.2 

2,042,061,500 

9.9 

968,824,072 

11.4 

1914. 

142,436 

51.6 

707,568 

10.1 

1,925,518,298 

7-9 

903,524,881 

1 , 555 , 136,394 

9.1 

1919. 

138,112 

47.6 

623,468 

6.9 

3,536,321,836 

5-7 

6.2 

Corporation: 





10,904,069,307 


4,526,055,153 


1904. 

51,097 

69,501 

23.6 

3,862,608 

70.6 

73-7 

71.9 

1909. 

25.9 

5,002,393 

5,649,646 

75-6 

16,341,116,634 

20,177,084,844 

79-0 

6,582,207,117 

77-2 

1914. 

78,151 

28.3 

80.3 

83.2 

8,088,691,744 

31,817,546,565 

81.9 

1919. 

9 i, 5 i 7 

31-5 

7 , 875,133 

86.6 

54 , 744 , 392,855 

87.7 

87.0 

Other: 









1904. 

5 i,i 37 

23 -7 

849,762 

15-5 

2,187,002,632 

2,288,873,736 

14.8 

943 , 346,713 

iS-o 

1909 . 

58,385 

21.7 

807,770 

12.2 

11.1 

978,229,803 

11 .5 

1914. 

55,204 

20.0 

679,123 

9-7 

2,143,831,582 

8.8 

886,129,268 

9.0 

1919. 

60,476 

20.8 

597,771 

6.6 

4,137,364,082 

6.6 

1,669,015,531 

6.7 


* Taken from the Statistical Abstract of the United States (U.S. Department of Commerce), 
1921, p. 222. 


e) TABLE XIX* 


Form of Organization of Producing Mining Enterprises 
in the United States, 1919 


Form of Organization 

Number of 
Enterprises 

Percentage of Total 

No. of 
Enterprises 

No. of 

Wage-Earners 

Value of Product 

Corporation. 

10,879 

51 .1 

94.2 

93-6 

Individual. 

4,312 

20.3 

2-5 

2-3 

Firm. 

5,249 

24.7 

2-9 

3-3 

Other. 

840 

3-9 

0.4 

0.9 

Total. 

to 

M 

V# 

K> 

OO 

O 

100.0 

100.0 

100.0 


* Taken from the U.S. Census, 1919, p. 19 of volume on Mines and Quarries. 


1 The following figures, taken from the Census of Manufactures, 1920, throw 
some additional light on the trend of organization in the last twenty years: 

In 1899, the number of factories, exclusive of hand and neighborhood indus¬ 
tries, was 207,514; in 1919 it was 290,111; a percentage increase of 39.8. In the 
same two years their capitalization (in millions) was respectively $8,975 and 
$44,570, a percentage increase of 396.6; their quotas of wage-earners were 
4,712,763 and 9,098,119, a gain of 90.9 per cent; their wage bills (in millions) 
were $2,008 and $10,646, an increase of 425.2 per cent; their gross product 
values (in millions) were $11,407 and $62,428, a percentage gain of 447.3. 





























































ECONOMIC DEVELOPMENT IN AMERICA 187 

11. CHANGES IN FARM TENURE, SIZE, AND 

ORGANIZATION 

a) TABLE XX* 

Farms by Tenure in the United States: Percentage Classi¬ 
fication, 1880-1920, by Decades 



1920 

19x0 

1900 

1890 

1880 

Owners. 

Managers. 

60.9 

1.1 

62.1 

0.0 

63-7 

1.0 

71.6 

74-5 

Tenants. 

38.1 

37 -o 

35-3 

28.4 

25-5 


* Taken from the Fourteenth Census of the U.S., 1920, Vol. VI, Part I, p. 19, and from the Twelfth 
Census of the U.S., 1900, Vol. V, Part I. 

The 1880 and 1890 census figures fail to classify separately owners and managers. 


b ) TABLE XXI* 

Percentage of the Number of Farms in Each of the Six Specified 

Areas in Acres, 1880-1920 



1920 

1910 

1900 

1890 

1880 

Under 20. 

12.4 

13.2 

W 

w 

00 

9.1 

9.8 

20 to 49. 

23-3 

22.2 

21.9 

19.8 

19-5 

50 to 99. 

22.9 

22.6 

23.8 

24.6 

25.8 

100 to 499. 

38.1 

39-2 

39-9 

44-0 

42.3 

500 to 999. 

2-3 

2.0 

1.8 

1.8 

1.9 

1,000 and over. 

1.0 

0.8 

0.8 

0.7 

0.7 


* Constructed from the U.S. Census Report, 1880-1920. 


c) TABLE XXII* 

Improved and Unimproved Farm Land in the United 
States: Percentage of Acres, Census 
Years, 1850 to 1920 


Census Year 

Improved 

Unimproved 

1920. 

52.6 

47-4 

1910. 

54-4 

45-6 

1900. 

49-4 

50.6 

1890. 

57-4 

42.6 

1880.'. 

53 -i 

46.9 

1870. 

46.3 

53-7 

i860. 

40.1 

59-9 

1850 . 

38.5 

61.5 


* Taken from the U.S. Census Report, 1920, Vol. VI. 
























































THE WORKER IN MODERN ECONOMIC SOCIETY 


188 


d) TABLE XXIII* 

Farms in the United States: Number and Size in Acres, 
Classification by Decades, 1850-1920, and Percent¬ 
age of Increase or Decrease 


Year 

Number of 
Farms 

Percentage 
of Increase 

Acres in Farms 

Percentage 
of Increase 

Average 
Number 
of Acres 
per Farm 

Percentage 
of Increase 
(+) 

of Decrease 
(-) 

1920. 

6 , 448,343 

1 

955 , 883,715 

8.0 

148.2 

+ 7 

1910. 

6,361,502 

11 

878 , 798,325 

4.0 

138.1 

- 5 

1900. 

5 , 737,372 

25 

838 , 59 D 774 

34-0 

146.2 

+ 7 

1890. 

4,564,641 

13 

623,218,619 

14.0 

136.5 

+ 2 

1880. 

4,008,907 

50 

536,081,835 

3 1 0 

133-7 

—12 

1870. 

2,659,985 

30 

407 , 735,041 

0.1 

153-3 

-23 

i860. 

2,049,077 

41 

407,212,538 

38.0 

199.2 

— 1 

1850. 

I, 440,073 


293,560,614 


202.6 









* Taken from the Fourteenth Census of the U.S., Vol. VI, Part I, and Twelfth Census of the U.S., 
Vol. V, Part I. 


e) TABLE XXIV* 

Farms in the United States: Average Value in Dollars 
Per Acre with Improvements, and Percentage of 
Increase or Decrease. (Census Years, 1850-1920.) 


Year 

Value per Acre 
with Improve¬ 
ments 

Percentage of 
Increase (+) 
or Decrease ( —) 

1920. 

81.52 

+ 74 

1910. 

46.64 

+ 135 

1900. 

19.82 

- 7 

1890. 

21.31 

-f 12 

1880. 

19.02 

+ 4 

1870. 

18.26 

+ 11 

i860. 

1850. 

16.32 

II . 14 

+ 46 




* Taken from the Fourteenth Census of the U.S. (1020). Vol. VI, Part I, and Twelfth Census of the 
U.S. (1900), Vol. V, Part I. 


12. RACIAL ELEMENTS IN THE AMERICAN POPULATION, 
WITH ESPECIAL ATTENTION TO WAGE-EARNERS 

a) THE NEGRO POPULATION 1 

In 1920 the Negro population of the United States numbered 
10,463,131. This represented a 10-year increase of 635,000, or 6.5 
per cent, the lowest thus far recorded. In consequence of this slow 
numerical progress the proportion formed by Negroes in the total 
population declined from 10.7 per cent in 1910 to 9.9 per cent in 1920. 
The highest proportion, 19.3 per cent, was recorded in 1790. 

1 Adapted from William S. Rossiter, Census Monograph /, “Increase of Popula¬ 
tion in the United States, 1910-1920.” (Government Printing Office, 1922.) 














































ECONOMIC DEVELOPMENT IN AMERICA 189 

Table XXV throws some light on the distribution of the Negro 
population at different periods of American history: 

TABLE XXV 

Negro Population 


Census Year 

Percentage in 
Southern States 

Percentage 
Native Remain¬ 
ing in State of 
Birth 

Percentage 

Urban 

Percentage 

Rural 

1890.. 

90-3 

*85.2 

19.8 

80.2 

1900. 

89.7 

84.4 

22.7 

77-3 

1910. 

89.0 

83-4 

27.4 

72.6 

1920. 

85.2 

80.1 

34-0 

66.0 


* Relates to total colored population, including Indian, Chinese, and Japanese. 


b) THE TREND OF IMMIGRATION 
TABLE XXVI* 

Immigration to the United States, 1820 to 1920, by Decades 


Period 

Immigrants 

Percentage of 
Distribution 

Average per Year 

1820-30. 

151,824 

0.4 

13,802 

1831-40. 

599,125 

i -7 

59,913 

1841-50. 

1 , 713,251 

5 -i 

I 7 D 325 

1851-60..*. 

2,598,214 

7-7 

259,821 

1861-70. 

2,314,824 

6.8 

231,482 

1871-80. 

2,8l2,191 

8-3 

281,219 

1881-90. 

5,246,613 

15-5 

524,661 

1891-1900. 

3,687,564 

10.9 

368,756 

1901-10. 

8 , 795,386 

26.1 

879,539 

1911-20*. 

5 , 735 , 8 h 

17.0 

573,581 

Total. 

33 , 654,803 

100.0 

333,215 


* Compiled from figures in the Statistical Abstract of the United States (U.S. Department of 
Commerce), 1921, p. 103. 


TABLE XXVII* 

European Immigration to the United States, Fiscal Years 

1882 and 1907, by Class 


Class 

Year 

Percentage Distribution 

1882 

1907 

1882 

1907 

Old immigration. 

563 N 75 

227,851 

86.9 

19.0 

New immigration. 

84,973 

971,608 

1 3-1 

81.0 

Not specified. 

38 

107 

X 

X 

Total. 

648,186 

1,199,566 

100.0 

100.0 


* From Immigration Commission Report, I, 156. 
































































THE WORKER IN MODERN ECONOMIC SOCIETY 


190 


c) AN ANALYSIS OF THE OLD AND NEW IMMIGRATION 1 

[Note: The terms new and old immigration are used to signify 
the immigrants from Southeastern and Northwestern Europe, respec¬ 
tively. The latter was predominant prior to 1885; the former became 
increasingly important after that date. The relative change in 
importance is shown by Table XXVII.— Ed.] 

1. Countries of origin and character of the early and late immigra¬ 
tion. —A study of the immigration into the United States, from the 
time that our immigration records began in 1819 to date, shows, as 
already pointed out, a change in the character of the immigration as 
well as in its extent. During the last twenty-five to thirty years so 
marked has been the change in the type of immigrants that it is con¬ 
venient to classify our immigration as the old, that is, the immigrants 
of those races and countries which furnished the bulk of immigration 
prior to 1883, and the new, namely, the races coming since that date. 
The former class includes primarily immigrants from England, Ire¬ 
land, Scotland, Wales, Belgium, Denmark, France, Germany, The 
Netherlands, Norway, Sweden, and Switzerland. These countries 
furnished some 95 per cent of the total number of immigrants coming 
into this country before 1883. In 1907, 81 per cent of the total 
number of European immigrants, including Syrians, came from Austria- 
Hungary, Bulgaria, Greece, Italy, Montenegro, Poland, Portugal, Ru¬ 
mania, Russia, Servia, Spain, Syria, and Turkey. 

The change in the character of the immigration is especially 
marked by the fact that during the last few years more immigrants 
have come from any one of the three countries of Austria-Hungary, 
Italy, or Russia than from all of the North European countries taken 
together that formerly furnished the bulk of European immigrants. 

The rapidly rising post-war tide of immigration shows no change 
in this tendency. Southern and Eastern European peoples pre¬ 
dominate. The enactment of the recent legislation which limits 
the number entering the United States to a percentage basis of those 
already here was passed in order to modify this tendency. The 
figures for 1914 are very striking. In that year only 10 per cent 
of the entire immigration came from Northern and Western Europe. 

2. City versus country dwellers. —The immigrants of the earlier 
day came to this country primarily with the purpose of becoming 
permanent dwellers; and a very large proportion of them, agricultur- 

1 Adapted with permission from Jeremiah W. Jenks and W. Jett Lauck, The 
Immigration Problem, pp. 25-38, 339. (Funk & Wagnalls Co., 1922.) 


ECONOMIC DEVELOPMENT IN AMERICA 


191 

ists abroad, went to our rural districts, took up land and became 
farmers here. Circumstances have so changed that the newer immi¬ 
grants follow to a very great extent a different course. With the 
exception of the Hebrews, primarily from Russia, who are by com¬ 
pulsion in that country largely city dwellers, the present-day 
immigrants likewise come from country districts. Coming to this 
country, however, they find that our supply of free agricultural land 
is practically taken up. In consequence, these rural peasants have 
flocked into our industrial centers and have entered upon occupations 
for which they have had no previous training. The 1920 census 
shows that this movement toward the mining and manufacturing 
centers is still as great as ever. 

3. Sex and family life .—Perhaps the most fundamental of the 
institutions of modern times is that of the family. With, of course, 
notable individual exceptions, the men and women who promote best 
the highest civilization are gathered into families, and have the 
benefit of a home life. The members of the old immigration, as a 


TABLE XXVIII* 

European Immigration (including Syrian) to the United States 
by Class and Sex, in* Fiscal Years 1899-1909, inclusive 


Class 

Number 

Percentage 

Male 

Female 

Total 

Male 

Female 

Total 

Old immigration.... 
New immigration. . . 

1 , 329,923 

4 , 338 ,o o 5 

943,859 
1,601,247 

2,273,782 

5 , 939,252 

58.5 

73 -o 

41-5 

27.0 

100.0 

100.0 

Total. 

5,667,928 

2,545,106 

8,213,034 

69.0 

31.0 

100.0 




* Compiled by the United States Immigration Commission from reports of the Commissioner- 
General of Immigration. 


rule, came much more generally in families, with the evident purpose 
of making America their permanent home, than do the members of 
the new immigration. If we classify our European immigration 
(including Syrian), to the United States by class and sex, in the fiscal 
years 1899-1909, inclusive, we note that of the old immigration 41.5 
per cent were females, while of the new immigration only 27 per cent 
are females. This indicates most clearly that the members of the 
new immigration are much less likely to remain and become thoroughly 
assimilated to American institutions than those coming from countries 
of the old immigration. 

























192 


THE WORKER IN MODERN ECONOMIC SOCIETY 


4. Occupations of immigrants .—Immigrants are far more readily 
assimilated and are also likely to be better satisfied if they can engage 
in occupations that are congenial to themselves as well as profitable. 
Unfortunately, the old and the new immigration differ decidedly in 
respect to the occupations followed by the immigrants in this country, 
as compared with their occupation in the country of their birth. 

The best practical classification of the different occupations under 
general heads is shown in the table below: 


TABLE XXIX* 

Occupation of European Immigrants (including Syrians) to the 
United States by Occupation and Class, 1899-1909 


Occupation 

Number of Persons 

Percentage 

Old 

Immigration 

New Immigra¬ 
tion (Hebrews 
Excepted) 

Old 

Immigration 

New Immi¬ 
gration 
(Hebrews 
Excepted) 

Professional. 

■56,406 

442,754 

138,598 

40,633 

402,074 

424,698 

678,510 

90,109 

17,080 

441,984 

I,142,064 
42,605 
1,814,180 

403,784 

1,041,049 

46,324 

2-5 

19-5 

6.1 
1.8 

17.7 

18.7 

29.8 
4.0 

0-3 

8.9 

23.1 

•9 

36.7 

8.2 

21.0 

•9 

Skilled laborers. 

Farm laborers. 

Farmers. 

Common laborers. 

Servants. 

No occupation. 

Miscellaneous. 

Total. 

2,273,782 

4,949,070 

100.0 

100.0 



* Compiled by the United States Immigration Commission from reports of the Commissioner 
General of Immigration. 


It is just, probably, to consider farm laborers and common laborers 
as unskilled. Doubtless, also those marked as having no occupation 
should, generally speaking, be classed in the same group. Leaving 
out the Hebrews, as practically none of them are farm laborers, we 
find that about 60 per cent of the new immigration consists of farm 
laborers and common laborers. These classes furnish less than 25 per 
cent of the old immigration. Even with the Hebrews included we find 
the percentage of unskilled, or common, and farm laborers much 
larger among the new immigrants. The percentage of farmers as 
distinguished from farm laborers is larger among races found in the 
old immigration, though owing to the greatly increased total immigra¬ 
tion the absolute number is somewhat larger among the new. 

A careful study of the figures, however, shows from this fact alone 
that the new immigration is much more difficult to assimilate than 





























ECONOMIC DEVELOPMENT IN AMERICA 


193 


the old, because of these characteristics of occupation. A percentage 
of the total immigration, therefore, that might readily have been 
assimilated, provided the immigrants were of the older type, might 
prove much more difficult of assimilation with immigrants of the 
new type. 

5. Illiteracy .-—The question of illiteracy, as a result of the examina¬ 
tions held by the army authorities, has been brought forcibly to the 
attention of the American people. These examinations showed that 
approximately 25 per cent of the draft army were unable to use 
effectively the English language, and that much must be done with 
both the foreign-born and the first generation born in the United 
States if assimilation, political and social, is to be attained. The 
United States, according to the 1920 census, is one of the most illiterate 
of civilized nations. Although final figures are not ready, it is evident 
that the army of illiterates will not fall far short of 6,000,000 or 
7,000,000. Two million of these illiterates are in nine of the southern 
states. The states with a large foreign-born population have a still 
greater problem. New Jersey has 127,661 illiterates, of whom 
111,595 are foreign-born. 

TABLE XXX 

Number and Percentage of Illiterates Fourteen Years of Age 
or over, in Each Class of European Immigration (including 
Syrian) in Fiscal Years 1889 to 1909, inclusive 


Class 

Total Number 

14 Years or over 

Persons 14 Years or over Who 
Could Neither Read nor Write 

Number 

Percentage 

Old immigration. 

1,983,617 
. 5 , 215,444 

52,833 

1,865,992 

2.7 

New immigration. 

35-8 


Total. 

7,199,061 

1,918,825 

26.7 



6. Inclination to return to Europe .—Our earlier immigration records 
did not take account of the aliens leaving United States ports, but 
beginning with 1907 such a record has been kept and the figures 
for the year 1908 are available. Inasmuch as in the fall of 1907 there 
was an industrial crisis followed by a period of depression, the return 
movement during the year 1908 was doubtless greatly stimulated, 
while on the other hand the immigration during the earlier part of 
1907 was also very large. The European emigration, including the 
Syrians, into the United States in the year 1907 showed 22.7 per cent 



















194 


THE WORKER IN MODERN ECONOMIC SOCIETY 


of the old immigration and 77.3 per cent of the new, whereas the 
difference between the immigrants of these two classes leaving the 
United States in the year 1908 was still more striking, those of the old 
immigration numbering only 8.9 per cent, while the new formed 
91.1 per cent. These facts would seem to show that the races of 
peoples composing the older immigration are much more largely 
permanent residents, whereas the very large proportion of the newer 
immigrants are merely transient dwellers who come here for a few 
years to acquire a competence and then return to their home country. 

That 63.9 per cent of the foreign-born are citizens or on the way 
to become citizens is one of the most important announcements of 
the 1920 census. Out of a total of 6,928,027 foreign-born white males, 
twenty-one years of age and over, 3,314,577, or 47.8 per cent, are 
reported as being fully naturalized, while 1,116,698, or 16.1 per cent, 
have taken out their first papers. This marks quite an improvement 
over the figures of the 1910 census, when only 45.6 per cent were 
naturalized and 8.6 per cent had taken out their first papers. The 
great advance is to be found here, only 570,772 having first papers 
in 1910, compared with 1,116,698 in 1920. The reasons for this 
advance may be found in the World War with its emphasis upon 
citizenship and extension of opportunities along educational lines 
by the federal government and many state departments of education. 

[Note: It should be noticed that Jenks and Lauck classify the 
new and the old immigration for the same period of time—namely, 
1899 to 1909. Had they been compared for the period in which each 
was in turn dominant, i.e., the period 1873-1884 for the old immigra¬ 
tion and the period 1899 to 1909 for the new immigration, it would 
be found that the new immigration was no more unskilled upon its 
arrival in the country than the old was in its day. What has occurred 
is that the new immigration from Southeastern Europe has supplied 
the unskilled labor and has served to prevent a great deal of unskilled 
labor coming from Northwestern Europe, thus making the immigrants 
from Northwestern Europe a more skilled class than formerly.— Ed ] 

PROBLEMS 

1. What has been the influence of the frontier on American “human 
nature”? Has this question any significance for an understanding of 
modern problems of industrial organization ? 

2. Has “nature” or “nurture” been more influential in the molding of 
American character ? Is either changing today ? are both ? Explain 
how. 


ECONOMIC DEVELOPMENT IN AMERICA 


195 


3. What were the economic assumptions of the founders of the American 
republic ? Where did they get them ? Can you see any reasons why 
these assumptions should have accorded well with (a) the physical 
environment and the national task which the pioneers faced; (b )with 
the character of the people themselves ? 

4. Can you find any concrete expression of these assumptions in the 
fundamental law of the land ? Where and how ? Has this any bearing 
on present-day industrial relations ? 

5. Is there any significance in the fact that Adam Smith’s Wealth of 
Nations and the American Declaration of Independence appeared in 
the same year ? 

6. “American institutions were framed for an agricultural and pioneering 
country. They are beginning to feel the pressure of the transition to 
industrialism.” Do you agree? Justify your answer. 

7. “America has always been and must always remain profoundly indi¬ 
vidualistic.” What is individualism? Does corporate organization 
destroy individualism? Does large scale industry? Do large cities? 
Do trusts ? Do trade unions ? Do political parties ? Is individualism 
a matter of environment, social organization, mental attitude, or 
something else ? 

8. Can you see any significance in the fact that the following phenomena 
all occurred in about the same period (1880-90): the closing of the 
frontier; the end of the railway speculative boom; the founding of 
the American Federation of Labor; the appearance of “scientific 
management”; the appearance of the “trust”? 

9. “The railway meant for the Western World the end of famine on a 
large scale.” Necessarily ? Why or why not ? 

10. Is the growth of American cities due chiefly to industrial or to com¬ 
mercial causes? Could you classify the larger cities as due predomi¬ 
nantly to one or the other ? 

11. Compare the American to the medieval town with respect to the follow¬ 
ing factors: cause of origin; social life; class grouping; unity of thought, 
ideas and outlook; stability of population; religious life; education. 
Explain the differences. Do they throw any light on modern “industrial 
relations” ? 

12. “The medieval population was stable: the modern population is con¬ 
tinually in process of migration.” Is this true? What are the reasons? 
Do they throw any light on “industrial relations” ? 

13. What were the early obstacles to capitalist industry in America ? How 
and when w r ere they overcome ? 

14. “The discovery of gold in California was one of the chief reasons for 
the rapid development of capitalist organization in America.” Is this 
true ? Why or why not ? 


196 THE WORKER IN MODERN ECONOMIC SOCIETY 

15. “The railway at one and the same time made us a nation; created an 
interdependent economic structure; and made possible and necessary 
the complex group associations to be found in modern America.” 
What does this statement include ? 

16. What has been the influence of the “market” (using the word in its 
widest sense) on the position of the American worker and the part he 
plays in industry today ? 

17. Is it true in America—assuming it is true in England—that “there is 
no more laissez faire” ? Why or why not ? 

18. “The economic transformation of America which has taken place within 
the past fifty years has been much more rapid than the so-called ‘ Indus¬ 
trial Revolution’ in England.” Do the facts given in this chapter 
bear out the statement? If you think they do, how do you account 
for the greater speed? How has economic change in America com¬ 
pared with that in modern Japan ? 

19. “War serves as a great stimulus to industrial combination.” Com¬ 
pare the influence of the Civil War on the shoe industry with the 
apparent effects of the World-War on industrial organization. 

20. On the basis of the material presented here, what do you regard as the 
most important factors making for large-scale production in the shoe 
industry ? 

21. Select what you regard as the six most important basic economic changes 
which have taken place in this country in the past fifty years, and show 
why they are significant in understanding the present status of the 
wage-earner. 

22. If you were asked to describe American “capitalism” of today as com¬ 
pared with that of 1850, what significant differences would appear? 

23. From Tables VI and VII trace the relative importance since 1870 of 
agriculture; domestic service; professional work; clerical occupations; 
wage work. What generalizations would you make from these figures 
as to (a) the way the country now makes its living, ( b ) the relative 
economic independence of the people ? Do they throw any light on 
(a) the policies of political parties, ( b ) the organization of labor, ( c) 
changing social ideas ? 

24. To what extent and how can the changes in occupational groupings 
shown in Tables VI, VII, VIII, and IX be interpreted by means of 
the remaining tables in the chapter? 

25. “The story of modern America is the story of three things: the machine, 
the corporation and the city.” Do the tables in this chapter bear out 
this statement ? 

26. How can it be said that the corporation is the dominant type of business 
organization when the individual enterprise is the type of more than 
half the manufacturing establishments? 


ECONOMIC DEVELOPMENT IN AMERICA 


197 


27. What do Tables XV, XVI, and XVII show as to the relative 
importance of small-scale as against large-scale industry? Why is 
large-scale industry so important if more than half the establishments 
employ less than five wage-earners ? 

28. What light, if any, do the tables on agriculture throw on modern 
problems of life and work on the farm ? 

29. Do these tables or the others indicate the importance of the end of 
“free land”? 

30. “‘Labor’ includes the vast majority of the people.” On the basis of 
the tables in this chapter, do you agree ? Which of the groups in Tables 
VI and VII would you class as “labor”? which as “capital”? What 
is the basis of your classification ? 

31. It is sometimes said there are three parties: labor, capital, and the 
public. In Table VI, which groups make up the public? 

32. It is sometimes said that American industry rests on two helot classes: 
the Negro and the Southeastern European. Do these two groups furnish 
a sufficient number of unskilled laborers to supply the needs of the 
country ? 

33. Does America now have a permanent laboring class ? 

34. What is meant by “the new immigration” and “the old immigration” ? 
Trace carefully the history of the two. Can you explain the changed 
character of present-day immigration ? 

REFERENCES FOR FURTHER READING 

Adams, Henry, The Education of Henry Adams 
Beard, Charles A., Contemporary American History 
Bogart, E. L., Economic History of the United States 
Carnegie, Andrew, Autobiography 

Commons, J. R. (Ed.), Documentary History of American Industrial Society 

Jenks, J. W., and Lauck, W. J., The Immigration Problem 

Keir, Malcolm, Manufacturing Industries in America 

Lippincott, Isaac, Economic Development of the United Stales 

Merriam, C. E., American Political Ideas 

Simons, A. M., Social Forces in American History 

Stearns, Harold E. (Ed.), Civilization in the United States 

Turner, F. J., The Frontier in American History 

Van Metre, T. W., Economic History of the United States 

Vogt, Paul L., Introduction to Rural Sociology 

Watkins, G. P., The Growth of Large Fortunes 

Weyl, Walter A., The New Democracy 






















■ 






. 







> 




* 










- 






I 







































PART THREE 


THE WORKER IN HIS RELATION TO 

THE MARKET 

















INTRODUCTION 

Used in its widest sense, the title of the present part might 
quite well be taken as the title of this volume of readings as a whole. 
Modern society is a market society, and the rapid development of 
national and world-markets (in America a story of the last five or 
six decades) was one of the main themes of the last part. The market 
is the institution through which modern specialized workers and 
the specialized establishments in which they work are organized into a 
producing mechanism. On it depends the wage-earner’s livelihood 
(along with that of everyone else), and in large measure the character 
of the contribution he makes and his whole status in the modern 
scheme. To this essential fact are chiefly to be traced the char¬ 
acteristic methods and devices through which he tries to make his 
influence felt. 

For purposes of analysis, however, it will be convenient to confine 
the material of the present part to a somewhat narrower range of 
inquiry than that just suggested, leaving to later parts some of the 
wider implications of the market relationship. Our immediate 
interest is in wages, but a moment’s reflection will show that even this 
restriction of our topic leaves open a very wide field which can be 
treated from an almost infinite number of angles. Wages can be 
regarded as an incentive to productive effort, as one of the main 
divisions of the distribution of national income, as a kind of “nexus” 
for binding society together. They can be treated to an economic, a 
psychological, an ethical, a political, or a historical analysis, or to a 
combination of all these. 

Something, indeed, of them all will be found in the material which 
follows, since we are interested here not so much in a detailed descrip¬ 
tion of the processes of the wage market as in getting a somewhat 
general view of the forces which determine the modern worker’s 
livelihood and some basis for gauging the nature of the position he 
now occupies. 

The part has been organized as follows: 

The seventh chapter is concerned with a general picture of the 
worker’s present market situation in the light of its origins, together 
with some of the factors which determine the market value of labor, 
and a few of the more important general forces which underlie the 
market. 


201 


202 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The eighth chapter brings into the discussion some possible 
theoretical bases for judging the worker’s remuneration. 

The ninth chapter undertakes a statistical analysis of present- 
day American standards of living, wages and earnings, and distribution 
of wealth and income. 

The tenth chapter deals with women’s work and wages and the 
eleventh with hours of work. 

The twelfth chapter presents a concrete case of wage adjustment 
involving most of the issues presented in the earlier parts. 

It should be noticed that while the chapter in the main is con¬ 
cerned with wage rates, it is in reality quite impossible to isolate 
questions relating to wages from broader business problems. The 
worker’s livelihood, for example, depends not only on the rate he 
receives per hour or per piece, but quite as much on the regularity 
• of his employment, a problem reaching out into a wide range of mana¬ 
gerial issues, among which not the least are those pertaining to the 
fluctuations of the business cycle. This interdependence is quite 
clearly shown in such selections as 6 and 9 in chapter vii, 8 and 10 in 
chapter viii, and in chapter xii. 

The question of unemployment, fundamentally a market problem, 
along with other questions primarily relating to “security,” is devel¬ 
oped more fully in Part Four following. The two parts are highly 
interdependent, and may be regarded as simply different aspects of the 
same general story. In like manner the trade union, in its more 
purely economic aspects, is simply an outgrowth of a market relation¬ 
ship, but for convenience its fuller treatment as a modern institution 
is reserved for specific development in Part Five. 

The discussion of the present division presupposes on the part of 
the student a familiarity with the discussion of wages to be found in 
any good modern textbook in general economic theory. The 
instructor may well require him to review such a discussion in connec¬ 
tion with the present material. 1 

1 The following are suggested: Clay, Economics for the General Reader; Taussig, 
Principles of Economics; Alfred Marshall, Principles of Economics. See also the 
list of references for further reading at the end of chapter viii. 


CHAPTER VII 

MARKET FACTORS AND FORCES 

A. Introduction 

i. A GLIMPSE OF THE ORIGINS OF THE WAGE 

SYSTEM 

PREPARED BY C. N. HITCHCOCK 

It is common usage today to speak of a worker as being “worth” 
fifty cents, a dollar, or two dollars per hour—i.e., his services are 
valued or measured in the market by that number of financial units. 
The very commonplaceness of the expression serves to show the 
completeness with which the measurement of values in financial units 
has pervaded society. Yet at the most the financial measurement of 
the value of human effort—the conception of labor as a market 
commodity—has been a development of the last three hundred years, 
and its real fruits are a product of the last one hundred and fifty. 
True, money wages existed long before that time: they have probably 
been used wherever a money economy has emerged. There is, how¬ 
ever, an important distinction to be made between most of these 
earlier wage systems and that of today: a distinction which should 
become clearer in succeeding paragraphs. In most of them the 
“value” represented or measured by money payments was different 
from market value. Today wage is a market measurement. 

The barest outline of the change which has taken place will have to 
suffice here. Any complete chronicle of the transition is impossible. 
It would be as easy to trace exactly the development of the capitalistic 
spirit and the speculative market. It is with these that the pecuniary 
measurement of labor has its closest family ties, and like them its 
origins must be sought in that period of commercial and industrial 
awakening which broke up the feudal system in the fourteenth to the 
seventeenth centuries. A comparative examination of the character 
of labor’s reward in two or three successive periods should, however, 
make the differences fairly evident. 

Wage in mediaeval society .—It has already been suggested that 
mediaeval life was organized on fairly definite caste lines. In early 
feudal (manorial) economy, the agricultural worker’s “wage” was 
the amount of truck he could raise on the plot of land which inheritance 


203 


204 


THE WORKER IN MODERN ECONOMIC SOCIETY 


and custom decreed he should hold from the lord, subject to such 
deductions as custom might decree in the shape of payments to the 
lord. It was a payment in terms of his customary standard of life— 
in most cases a miserable bare subsistence. 

With the beginnings of money economy on the manor, and the 
development of town life and craft industry, subsistence and standards 
of living—along with personal freedom—underwent certain changes 
for the better. The governing standard of payment, however, 
remained much the same. It was still a payment in accordance 
with the worker’s needs—the needs of the caste and position in life 
to which God had called him. Under the dominant theory of the 
time there could be no questioning of this basis of measurement. It 
was underwritten by the sanction of the Church as expressed by the 
Church philosophers, and the force of the State upheld the Church. 
In fact, of course, groups of workers under favoring circumstances 
were able to force advances in the amount of their wages—this is 
sufficiently attested by statutes designed to deal with rising wages at 
least as early as the fourteenth century. None the less, the essential 
fact remains that labor value until fairly well toward the end of the 
mediaeval period was measured by the needs of a customary stand¬ 
ard of living, regardless of whether it was expressed in pecuniary 
terms. As Professor Ashley points out in his discussion of the tran¬ 
sition to money payment of wages, 1 a currency can be used as a 
common measure of value long before it is actually employed in every 
day transactions as a medium of exchange—and it measured here the 
amount of food, clothing and shelter which the worker was accus¬ 
tomed to receive. 

The end of the 11 just price .”—The definite break in this state of 
affairs came with the rise of the trading classes in the fifteenth, six¬ 
teenth and seventeenth centuries and the beginning of capitalist pro¬ 
duction. It was inevitable that when one social group—the merchants 
and capitalists of the time—had broken the Church’s grip on their 
operations, the spell would gradually fall from the rest of society. 
Instead of producing and selling a made-to-order product for a fairly 
well defined “just” (i.e., cost of production in terms of customary 
livelihood) price, the enterpriser produced and sold for what he could 
get in the speculative market. Gradually this condition became the 
rule and not the exception despite the resistance of all the forces of 
custom and theology. Then, as a class of men developed which had 

1 Ashley, Introduction to Economic History and Theory, Part I, Book I, pp. 47-48. 



MARKET FACTORS AND FORCES 


205 


no basis of support except the sale of its labor power, it was quite 
natural for the society of the time to begin to expect that sale to be 
made on the same terms as other sales—namely, for what it would 
command in the market. The change was assisted by the extension 
of the legal device of the contract to cover services as well as goods. 

Eventually this transition did in effect take place, and with certain 
important qualifications “ labor” is today bought and sold in the 
international market very much like commodities. A fuller explana¬ 
tion of the qualifications mentioned, and of the character of modern 
wage determination, must be sought in later sections of this part. 
For the purpose of this brief sketch of the transition, it will be sufficient 
here to point out that as compared with the change in the character 
of commodity price, the change in wage followed a more roundabout 
route, it met with greater resistance and it has never been realized 
as completely. 

At least two separate, though related, sets of causes throw some 
light on the difference in the rate of change in the two cases. The 
first has to do with the worker himself, the second with the social and 
economic ideas prevalent in the successive stages of development. 

The worker’s attitude toward the market .—The workers themselves, 
as a class, were never enthusiastic about the change, despite the pos¬ 
sibility of financial gain which it opened up. This is probably less 
true today than it has been in the past, and less true in America than 
anywhere else, but there is no question about its almost universal 
truth in England up until very recent times. As a class they were not 
speculatively minded, and security at a low level of living seemed 
more attractive to them than uncertainty with a possibility of advance. 
As will be suggested in a moment, this latter possibility was a relatively 
remote one in any case. 

Speculation in labor power was, in fact, attended with special 
risks. For it is one of the peculiarities of the sale of labor that the 
seller’s stock-in-trade is especially identified with himself. If the 
shoe market was off, the shoe merchant lost his profit. If the labor 
market was off, the worker might—and sometimes did—starve. This 
distinction was only emphasized by the worker’s usual lack of a reserve 
fund, an essential asset of successful speculation. 

Consequently it is little wonder that he tried quite tenaciously to 
cling to his customary standard of living, and that he is still trying to 
emphasize or reintroduce the ideas of need, cost of living, or standard 
of living as factors in wage determination. As far as the Middle 


206 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Ages are concerned, however, his support in supernatural sanction was 
destroyed, the forces of the time were too strong for him, and he was 
slowly swept into the market along with everything else. 

The initial effects of the new economic philosophy .—The general 
spread of the “buy cheap and sell dear” point of view was a fairly 
immediate corollary of the development of the new market practice. 
Consequently, in the situation already outlined, its application to the 
purchase of labor might readily have been anticipated. As the power 
of the manufacturing and trading classes grew, their ideas and out¬ 
look pervaded society more and more fully, and the mediaeval con¬ 
ception of a standard of living wage, along with other elements of the 
feudal system, 1 yielded to their insistence. It was conceived to be to 
the interest of the business man to pay as little as possible for labor 
as for other purchases: wage determination became wholly a matter 
of bargaining. 

To see what had happened it is necessary only to turn to the Eng¬ 
land of Adam Smith’s day and follow through the various wage 
“theories” which have developed since. They vary much in point 
of approach, but at bottom they agree that somehow or other “ supply 
and demand” (i.e., the market) determine wages. This applies as 
well to the now generally current “productivity” theory of wages, 
which suggests that wage is governed by the worker’s productivity, 
but sometimes fails to make clear that the “worth” of productivity 
is the value that the market sets. 

The underlying machine-inspired philosophy of the early nine¬ 
teenth century greatly quickened the pace of the shift to the measure¬ 
ment of labor as a “factor in production.” It was not until well 
along in that century, however, that the new philosophy came fully 
into its own as regards wages. To the modern mind, influenced by 
modem facts, the general acceptance of a market determination of 
wage would suggest the idea that wages, like prices, could go up as 
well as down. To the eighteenth and early nineteenth century mind 
this did not at all necessarily follow. For the divine order of mediaeval 
philosophy was succeeded by a conception of a “natural” order only 
less absolute in its decrees as to the economic status of man. Under 
this conception—inspired partly by deductive reasoning, partly by the 

1 These changes were aided by the fluctuations in prices which the development 
of the market brought with it. With commodity prices no longer stable, it became 
very difficult to tell what “real” wages were. Living costs were no longer easily 
measurable. 


MARKET FACTORS AND FORCES 


207 


social facts of the time, partly by the supposed interests of the dom¬ 
inant class—wages were indeed determined by bargaining and there 
was nothing morally wrong in their rising, but the natural laws which 
governed their determination were an insuperable barrier to their 
ever actually doing so. To the force of this conception were added 
in turn the pessimistic interpretation of Malthus’ theory of popula¬ 
tion and the weight of the “ wages fund” theory. 1 

During the rapid changes attending the early days of the Industrial 
Revolution, therefore, the worker was divorced from the protection 
of his divinely sanctioned caste position, and was given instead the 
cold comfort of knowing that while he might increase his wages by 
successful bargaining, in fact it was impossible. To add to his 
difficulties, he was barred by the authority of the state from organizing 
with his fellows to test the truth of these economic doctrines. 

Two influences combined to end this state of affairs. One was 
the development of scientific thought, particularly the spread of the 
Darwinian theory of evolution, which helped to break up the idea of 
a “naturally” static world. The other was the fact that the huge 
increase in material wealth brought by the Industrial Revolution did 
extend in some measure to the working classes, with a resulting 
increase 2 in real wages, the worker himself taking a substantial part 
in effecting this result. 

Quo Vadis ?—It is conceded, then, that the measurement of labor 
has become a market process, and this has meant, among other things, 

1 For a fuller account of these theories, see pp. 239-47. 

3 Professor Bowley shows the rise of wages in England in the nineteenth cen¬ 
tury by an index number, as follows (Dictionary of Political Economy, Palgrave ed., 
1908. Appendix, p. 801): 

Index Number 



of Nominal 

Real 


Wages 

Wages 

1850-1854 

55 

50 

1855-1859 

60 

50 

1860-1864 

62 

50 

1865-1869 

67 

55 

1870-1874 

78 

60 

1875-1879 

80 

65 

1880-1884 

77 

65 

1885-1889 

79 

75 

1890-1894 

87 

85 

1895-1899 

92 

95 

1900-1904 

100 

100 


He says: “The result is not to be regarded as final in any sense but rather as showing 
the direction of the effect of the change of prices, i.e., the nature of the numerical 
relation between nominal and real wages.” 


208 


THE WORKER IN MODERN ECONOMIC SOCIETY 


that wages can go up as well as down, and that the worker is able to 
take an increasingly important part in determining what they are 
to be. It has, however, greatly complicated the problem in the 
modern community of determining their level. In the first place, 
price fluctuations make it difficult to determine what real wages are 
at one period as compared with another, or in one community or 
industry as compared with another. 

More fundamental than that, however, it is not surprising to 
find great confusion of counsel among modern manufacturers, modern 
workers and modern students as to (a) what the “ pecuniary measure¬ 
ment of labor” does really measure and ( b) what it ought to measure. 
It is a confusion which could only come in a society which was (rela¬ 
tively) abandoning traditional authority and seeking more or less 
consciously for an organization of its economic affairs in the light of 
definite purposes. The confusion lies, however, partly in a conflict 
of purposes, partly in incomplete knowledge of the forces which must 
be organized to carry them out. 

2. THE PARTIAL MAINTENANCE OF “STATUS” 1 

The present economic system in England 2 —so far as it is a 
“system”—is based upon the principle of “free enterprise.” The 
State leaves economic relations to be settled by free private contracts. 
Anyone may engage in any business (with few exceptions), and may 
sell in any market at any price. Prices are left to be settled by free 
bargaining between buyers and sellers. Competition is relied upon 
to prevent either party to the bargain from exploiting the other. 
The price of labour, by the sale of which the wage-earner lives, is left 
to be settled in the same way, by free bargaining between buyers and 
sellers; competition among employers is expected to secure for the 
wage-earner what he is worth, competition among workers to insure 
that no one gets more than he is worth. Only recently, and that in 
cases the conditions of which are specifically exceptional, has the State 
interfered to fix the wages of any kind of labour. The effect of this 
free bargaining is, according to the current rather optimistic theory 
of wages, that wages tend to equal the net product of labour, the 

1 Adapted with permission from Henry Clay, “The War and the Wage Earner,” 
in The Industrial Outlook, by various writers, edited by Henry Sanderson Furniss, 
M.A., pp. 61-75, 9 2 - (Chatto & Windus, London, 1917.) 

2 Allowing for possible minor changes in emphasis, the analysis of this article 
applies equally well to America. 


MARKET FACTORS AND FORCES 


209 


supply of labour being what it is, or as it is usually put, wages tend 
to equal the marginal net product of labour. 

The social organization that leaves the workers “free” to determine 
their economic relations by private contract has never evoked much 
enthusiasm amongst them. Their instinct has always been to cling 
to any institution or arrangement that seemed to secure their status. 

It is with wages alone, however, that we are concerned here, and in 
this connection the reaction of the workers against the system of free 
contract has had two chief objects: (1) to prevent the exploitation 
of their weakness in bargaining; and (2) to prevent the constant 
fluctuations which the constant variation in the demand for goods 
and services tends to produce in the value of the labour engaged in 
supplying the goods and services. 

They have been so far successful in attaining these objects that 
the position of the average wage-earner, unorganized as well as organ¬ 
ized, has a stability that one would not have expected a priori in a 
society which left wages to be settled entirely by private contract; the 
value of labour fluctuates less than the values of most commodities. 

This element of stability can be illustrated by a comparison 
between wages (the price of labour) and the prices of the produce or 
stocks and shares sold on the Exchanges, which economists take 
as the typical markets of the present economic system. In the latter, 
values are constantly being adjusted to changes in supplies and 
demand; every influence affecting either supplies or demand, unless 
cancelled by some countervailing influence, is reflected at once in the 
price-list. In the labour market, on the other hand, values are 
relatively rigid, and supply and demand are adjusted to them. It 
requires a great and long-continued falling-off in the demand for the 
products of their industry to induce the workers in an organized 
trade to consent to a reduction in the value of their labour—i.e., in 
the standard rate; if the alternative to a temporary reduction in the 
rate is a reduction in output and less work, they explicitly prefer that 
alternative. On the other hand, they are slow to demand an increase 
in the standard rate when the demand for the product of their industry 
is rising fast. While values tend, in the case of produce, to move so 
that the entire supply will always be taken up, in the labour market 
the seller gets a comparative fixity of value at the cost of fluctuations 
in employment, and the sacrifice of a share of the gains to be obtained 
from rapid changes in price. Prices of goods (wholesale, at any rate) 
will usually be reduced when demand falls off, and raised when de- 


210 


THE WORKER IN MODERN ECONOMIC SOCIETY 


mand increases; the worker will be affected usually only when the 
change is so great that men are turned off or overtime is necessary. 

The Trade Union is an organization by which the wage-earner 
seeks to attain these two objects. It removes the weakness as a 
bargainer of the seller of labour by substituting combination for 
isolation and collective bargaining for individual bargaining; its 
funds form a reserve on which the members can draw when the 
reserve price of their labour is not forthcoming, and it gives them, 
in the Trade Union official, an agent for the sale of their labour who 
can supply the special knowledge of market conditions and experience 
in bargaining which they lack. The second object it attains by 
formulating and defending the standard rate. It requires the em¬ 
ployer to insist on prices that enable him to pay the standard rate, 
and what one employer can pay it insists that all shall pay. If a 
falling-off in trade is prolonged, the union will consent to a reduc¬ 
tion in the standard rate; but temporary fluctuations are met either 
by contracting and expanding profits or by short time (or unemploy¬ 
ment) and overtime. 

But not one wage-earner in five is in an effective Trade Union. 
The great majority of wage-earners have neither the reserve funds 
nor the organization which enable Trade Unionists to overcome the 
weaknesses of their position in bargaining and set a reserve price 
on their labour in the form of a standard rate. Unless, then, the mass 
of wage-earners had found some other way of setting a reserve price 
on their labour, we might expect that the great majority of wage- 
earners would have their bargaining weakness exploited, until their 
wages were meagre subsistence wages, and fluctuating and uncertain 
at that; an employer would be able to transmit any pressure to which 
he was subjected on to the worker, and to enjoy the profits of good 
trade without bearing a corresponding share of the losses of bad 
trade. The workers in some industries are in this condition. There 
are no limits on competition for employment among them, and they 
can resist no reduction forced on them by their employers, so long as 
they can still subsist—with or without the aid of charity and the 
Poor Law—on the earnings they can make. 

The ultimate safeguard of the economic position of the wage- 
earners is the understanding that exists in every industry not 
“sweated” to stand out for a wage which will support a certain 
standard of life. If it were not for this understanding, the unscrupu¬ 
lous employer at any time, and the hard-pressed employer in bad 


MARKET FACTORS AND FORCES 


211 


times, would cut at the standard rate; other employers would follow 
suit, and the workers, weak in their isolation and lack of reserve, 
would be forced lower and lower. It is the object of a system of free 
contract to stimulate competition, and unrestricted competition 
among wage-earners when there is no scarcity of labour can lead only 
to the condition of the “sweated” trades. 

The maintenance by tacit or overt combination of their standard 
of life by any class of wage-earners is not inconsistent with their 
wages equalling the net product of their labour. In the first place, 
wages and the value of labour are distinct, and the productivity of 
labour does not depend altogether on the worker. If, then, the 
workers stick out for a certain wage, the employer may be able, 
either by altering his organization or by getting more labour out of 
each worker, or by both, to pay the wage insisted on without giving 
any more per unit of labour and without increasing the cost of produc¬ 
tion. 

Employer and wage-earner are often at cross-purposes in bargain¬ 
ing about wages. What concerns the employer is the price of labour, 
which may be low when wages are high, and high when wages are 
low. What interests the worker is the amount of his income; he 
will try to get as good a price as possible for his labour, but if he can 
secure the income, which his conception of his status demands, by no 
other means, he can be made to give more labour in the same time— 
as in the frequent case of piece-workers earning the same income 
after a reduction in hours as before. But even if this adjustment of 
productivity to wages were not possible, wage-earners could still by 
combination maintain a comparative fixity in their wages, just as the 
sellers of any commodity can by combination keep the price of it 
steady. They would have to adjust the supply of labour to the 
demand, and either work short time, support unemployed members, 
or restrict entrance to the trade, when the demand for their labor 
fell off. Except, however, in the case of a decaying industry, which 
can be met by the diversion into other occupations of recruits who 
would otherwise have taken the place of superannuated workers, 
the workers in any industry can usually maintain their standard 
rate, in spite of a temporary falling-off in the demand for their labour, 
in the safe assurance that the steady rise in demand as a whole , due 
to the steady growth of wealth as a whole, will presently bring prices 
up to a level that will enable employers to pay the standard rate 
while employing all the workers. It is this steady growth of wealth, 



212 


THE WORKER IN MODERN ECONOMIC SOCIETY 


and therefore of demand, that enables the workers to insist on their 
standard of life being maintained. 

Temporary fluctuations in an industry may make it temporarily 
difficult for the employer to charge on to prices the full amount of the 
wage needed to maintain the standard; but the losses of temporary 
fluctuations, like the gains due to temporary fluctuations, should be 
charged to profits, the social justification of which is that they are 
the payment for taking risks; and in the long-run the inevitable rise 
in demand will bring prices up to a level that will cover the needed 
wage. The tacit agreement to stick out for a wage that will support 
his standard of life serves the wage-earner the same purpose as a 
trench-line serves a modern army; it strengthens resistance against 
encroachment, and consolidates and makes secure any advance. 
It can be overwhelmed, but on the whole it has been the chief instru¬ 
ment in freeing the wage-earner from the loss of status to which 
unrestricted competition would lead, and in securing for him a share 
in the increase of wealth. 

This brief survey of the reaction of the workers to the stimulus 
of free enterprise has been made in order to discover what the worker 
wants. What he wants, primarily, though not of course exclusively, 
is his standard of life with security. He wants an assured economic 
status, and not all the golden possibilities of treading in Mr. Carnegie’s 
footsteps will compensate him for insecurity of status. Progress, a 
great historian has said, is a movement from status to contract. 
The worker is apparently of a different opinion; he prefers a com¬ 
promise, and has sought by voluntary organizations and instinctive 
combination to maintain an element of status in his economic condi¬ 
tion. And he has met with some success; wages are steadier than prices 
or profits; the great majority of workers are freed either by collective 
bargaining or by the establishment of customary rates from the 
worry of perpetual thought about their livelihood. But their status 
is never quite secure. 

B. Bargaining Factors 

3. THE MEANING OF “WAGES” 1 

Labor is paid for in many different ways, the two chief being by 
time wages and by piece wages. Presumably the employer endeavors 
to get the same amount of labor for his money whichever method he 
adopts. When the work is uniform and output can easily be measured, 

1 Adapted with permission from Henry Clay, Economics for the General Reader , 
pp. 279-83. (The Macmillan Co., 1919.) 


V 


MARKET FACTORS AND FORCES 213 

he usually prefers to pay the workman a fixed price per piece. In the 
textile industries the settlement of the price to be paid between work¬ 
man and employer is often a difficult matter; the calculation of wages 
from price-lists may be very complicated, the wage being the resultant 
of several variables. If a basis for piece rates, however, can be reached, 
the employer is relieved of the task of “driving” his workmen; since 
their wages depend on their output, they “drive” themselves. Some 
of the money saved in foreman’s wages is usually spent in paying 
inspectors to examine the work and reject what is faulty. 

In many occupations, however, the work is so varied that there 
can be no standard by which the output of the worker can be measured, 
in others the quality of the work suffers when the worker is paid by 
the piece; in such cases the employer will pay the worker by the 
amount of time he takes over the work, and pay foremen to see that 
the worker does not waste his time. There are many variations and 
combinations of these two simple methods of paying for labor. In 
some occupations, again, payment for labor is made partly in kind, 
and the value of such receipts in kind must be reckoned in calculating 
the true wage: the agricultural laborer has often a cottage or garden 
at less than its full rent, the domestic servant receives board and 
lodging in addition to her money wage. In other occupations, such 
as the mason’s and the grinder’s, some deduction for trade expenses 
has to be made from the weekly wage before the true money wage is 
reached. 

The weekly wage, however calculated, is very far from giving 
the true economic position of the worker; not the wage-rate but the 
income actually received determines his position. Hence the regu¬ 
larity or irregularity of work is a most important consideration in 
comparing the advantages of different occupations. 

The important thing is not what the trade pays the worker for 
an hour’s work or a week’s work, but what it pays him for his services 
as a whole; the worker and his family have to live for fifty-two weeks, 
even if the trade only uses his services for forty weeks. In the case of 
trades subject to considerable cyclical fluctuations, such as the ship¬ 
building trade, the average weekly wage has to be calculated over an 
even longer period. A worker may work overtime for eighteen 
months and then be on short time or without work for another eighteen 
months; his true money wage is his average weekly earnings over the 
whole period. 

Perhaps we may go farther and average a man’s earnings not over 
a week or a year or three years, but over a lifetime and that not over 


/ 


214 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the length of time he actually lives, but over the length of time a man 
ought to live if the conditions of his work are healthy. A trade 
employs a man, he adapts himself to its needs and thereby unfits 
himself for other work; he is dependent on the trade for a livelihood, 
and his true rate of wages is the amount of his earnings divided by the 
number of weeks he has to live on them. This is not commonly 
recognized: a wage is called a “good wage” if the rate of payment 
per week is high, though the employer may be exacting an amount 
of work from the worker so great that the man is “too old at forty.” 
In the heavy steel trade of Pittsburg, that industrial paradise, wages 
are “high,” but one man in three works twelve hours a day, seven 
days a week, and once a fortnight twenty-four hours on end; in the 
corresponding occupations in England the wages earned are not more 
than half as much, but the working life is longer, so that the total 
earnings are probably not much less. 

The distinction between income and wage emerges in another 
connection. The worker’s wage is what he earns himself: the income 
on which his family can draw usually includes the earnings of some 
other member of the family. Although boys and girls do not usually 
hand over the whole of their earnings to their parents, they contribute 
something to the upkeep of the home; and a man whose wife or 
children are earning might only make his economic position worse by 
moving to a district where he could command a higher wage himself, 
but his wife or children could find no employment, or less remunerative 
employment. In spite of the tendency of modern industry to deal 
with the individual rather than with the family, the family is still 
an economic unit as well as a social unit for many purposes. 

So far we have been considering the money income of the worker; 
the real income of the worker, however, consists of the goods and 
services that the money income will purchase, and the purchasing 
power of money varies from place to place, and from time to time. 
Allowance must be made for differences in the cost of living, a difficult 
and hazardous calculation to make, before we can compare wages 
in one country or district with wages in another, or wages at one 
time with wages at another. 

4. “LABOR” DISTINGUISHED FROM COMMODITIES 1 

Labor is not a commodity, but it is bought and sold like a com¬ 
modity. Both the thing sold and the sellers of it, however, have 
characteristics which distinguish labor from commodities. The seller 

1 Adapted from ibid., pp. 285-86. 


MARKET FACTORS AND FORCES 


2*5 


of labor cannot control the quality of the supply. The laborer sells 
labor, he does not sell himself; the quality of the labor he has to sell 
depends largely on his social environment, and especially on his 
parents. If he has been starved as a child in body and mind, his 
work as a man will suffer: if no foresight was exercised in his choice 
of an occupation, and he was put to the trade which gave the biggest 
immediate wage and no prospects of anything better, he will have 
no special skill to sell. The expenditure of money and trouble on 
training is necessary in youth, if the labor of the man is to be valuable; 
the investment must be made by the parents, the return comes not to 
the parents but to the child. Hence many parents do not make the 
investment even when they could. For the same reason the supply 
of labor is adjusted to the demand only very slowly. The success 
with which it is done depends largely on the foresight of parents, and 
after all their pains some great technical invention may make their 
forecast wrong. Though he sells his labor and not himself the la¬ 
borer must deliver it himself. “ It matters nothing to the seller of 
bricks whether they are to be used in building a palace or a sewer; 
but it matters a great deal to the seller of labor” (Marshall). There 
may be a great demand for a certain kind of labor in one district, 
while in another district men with that kind of labor to sell are un¬ 
employed yet unable to leave the district because they own their own 
houses or have children working. 

Again, labor, like time, will not keep: it must be sold at once or 
it is lost forever; it cannot be withheld from the market one day and 
saved till the demand is better. This characteristic of labor puts 
the seller of it in a weaker bargaining position than the buyer, and his 
position is usually the weaker without this aggravation. 

5. FOR WHAT DOES THE EMPLOYER PAY? 

a) WAGES VERSUS LABOR COST 1 

The object of the employer in preferring one system of payment 
to another, and generally in deciding what wage to pay his workers, 
is to reduce his labour costs per unit of output. This object is not 
necessarily attained by keeping down the rates of wages. Low wages 
may mean high cost, and high wages low cost. Where wages are so 
low as to be insufficient to maintain the health and strength of workers, 
an increase of wages may lead to such an improvement in the produc¬ 
tivity of workers as to lower the cost of production. And apart 

1 Taken with permission from James Gunnison, Economics, pp. 107-8. 
(Methuen, London, 1920.) 


2 16 


THE WORKER IN MODERN ECONOMIC SOCIETY 


from the mere question of physical efficiency, the psychological effects 
of a high wage are important from the point of view of output. 

b ) THE “ECONOMY OF HIGH WAGES ” 1 

The dogma of the economy of cheap labour, taught in a slightly 
modified form by many of the leading English economists of the first 
half of the nineteenth century, has dominated the thought and 
indirectly influenced the practice of the business world. 

The trend of more recent thought has been in the direction of a 
progressive modification of the doctrine of the “economy of low 
wages.” The common maxim that “if you want a thing well done 
you must expect to pay for it” implies some general belief in a certain 
correspondence of work and wages. The clearer formulation of this 
idea has been in large measure the work of economic thinkers who have 
set themselves to the close study of comparative statistics. 

The most carefully conducted investigation has been that of Pro¬ 
fessor Schulze-Gavernitz, who, basing his arguments upon a close 
study of the cotton industry, has related his conclusion most clearly 
to the evolution of modern machine-production. The earlier evidence 
merely established the fact of a co-existence between high wages and 
good work, low wages and bad work, without attempting scientifically 
to explain the connection. Dr. Schulze-Gavernitz, by his analysis 
of cotton spinning and weaving, successfully formulates the observed 
relations between wages and product. He compares not only the 
present condition of the cotton industry in England and in Germany 
and other continental countries, but the conditions of work and wages 
in the English cotton industry at various times during the last seventy 
years, thus correcting any personal equation of national life which 
might to some extent vitiate conclusions based only upon international 
comparison. This double method of comparison yields certain definite 
results, which Dr. Schulze-Gavernitz sums up in the following words: 
“Where the cost of labor (i.e. piece wages) is lowest the conditions of 
labour are most favourable, the working day is shortest, and the 
weekly wages of the operatives are highest.” The evolution of 
improved spinning and weaving machinery in England is found to be 
attended by a continuous increase in the product for each worker, 
a fall in piece wages reflected in prices of goods, a shortening of the 
hours of labour, and a rise in weekly wages. 

1 Adapted with permission from J. A. Hobson, The Evolution of Modern Capital¬ 
ism, pp. 352, 354, 358, 360-61, 365-68, 373. (Charles Scribner’s Sons, 1912.) 


MARKET FACTORS AND FORCES 


217 


A detailed comparison of England, the United States, and the 
Continent, as regards the present condition of the cotton industry, 
yields the same general results. A comparison between England and 
the United States shows that in weaving, where wages are much higher 
in America, the labour is so much more efficient as to make the cost 
of production considerably lower than in England; in spinning, 
where English wages are about as highly paid, the cost of production 
is lower than in America. A comparison between Switzerland and 
Germany, England, and America, as regards weaving yields the 
following results: 

TABLE XXXII 


Country 

Weekly 
Product 
per Worker 

Cost per Yard 

Hours of 
Labour 

Weekly Wage 

Switzerland and Germany. 

466 

0.303 

12 

M <0 

M • 

00 p 1 - 

England. 

706 

O.275 

9 

16 3 

America. 

1,200 

0.2 

IO 

20 3 


The low-paid, long-houred labourers of the Italian factories are easily 
undersold by the higher paid and more effective labour of England 
and America. 

The evidence we possess does not warrant any universal or even 
general application of the theory of the economy of high wages. If it 
was generally true that by increasing wages and by shortening working 
hours the daily product of each labourer could be increased or even 
maintained, the social problem, so far as it relates to the alleviation of 
the poverty and misery of the lower grades of workers, would admit of 
an easy solution. But though it will be generally admitted that a rise 
of wages or of the general standard of comfort of most classes of workers 
will be followed by increased efficiency of labour, and that a shortening 
of hours will not be followed by a corresponding diminution in output, 
it by no means follows that it will be profitable to increase wages and 
shorten hours indefinitely. It is not possible by dwelling upon the 
concomitance of high wages and good work, low wages and bad work, 
in many of the most highly developed industries to appeal to the 
enlightened self-interest of employers for the adoption of a general rise 
in wages and a general shortening of hours. Because the most profit¬ 
able business may often be conducted on a system which involves high 
wages for short intense work with highly evolved machinery, it by 
no means follows that other businesses may not be more profitably 

















2l8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


conducted by employing low-paid workers for long hours with simpler 
machinery. We are not at liberty to conclude that the early Lanca¬ 
shire mill-owners adopted a short-sighted policy in employing children 
and feeble adult labour at starvation wages. 

The evidence, in particular, of Schulze-Gavernitz certainly shows 
that the economy of high wages and short hours is closely linked 
with the development of machinery, and that when machinery is 
complex and capable of being worked at high pressure a net economy 
of high wages and short hours emerges. In this light modern 
machinery is seen as the direct cause of high wages and short hours. 

Our evidence leads to the conclusion that, while a rise of wages is 
nearly always attended by a rise of efficiency of labour and of the 
product, the proportion which the increased productivity will bear 
to the rise of wage will differ in every employment. Hence it is not 
possible to make a general declaration in favour of a policy of high 
wages or of low wages. 

The economically profitable wages and hours will vary in accord¬ 
ance with many conditions, among the most important being the 
development of machinery, the strain upon muscles and nerves 
imposed by the work, the indoor and sedentary character of the work, 
the various hygienic conditions which attend it, the age, sex, race, 
and class of the workers. 

Just as little can a general acceptance be given to the opposite 
contention that it is the increased efficiency of labour which causes 
the high wages. This is commonly the view of those business men 
and those economists who start from the assumption that there is 
some law of competition in accordance with whose operation every 
worker necessarily receives as much as he is worth, the full value of the 
product of his labour. Only by the increased efficiency of labour 
can wages rise, argue these people; where wages are high the efficiency 
of labour is found to be high, and vice versa; therefore efficiency deter¬ 
mines wages. Just as the advocates of the economy of high-wages 
theory seek by means of trade-unionism, legislation, and public 
opinion to raise wages and shorten hours, trusting that the increased 
efficiency which ensues will justify such conduct, so the others insist 
that technical education and an elevation of the moral and industrial 
character of the workers must precede and justify any rise of wages 
or shortening of hours, by increasing the efficiency of labour. Setting 
aside the assumption here involved that the share of the workers in 
the joint product of capital and labour is a fixed and immovable 


MARKET FACTORS AND FORCES 


219 


proportion, this view rests upon a mere denial of the effect which it is 
alleged that high wages and a rise in standard of comfort have in 
increasing efficiency. 

The relation between wages and other conditions of employment, 
on the one hand, and efficiency of labour or size of product on the other, 
is clearly one of mutual determination. Every rise in wages, leisure, 
and in general standard of comfort will increase the efficiency of labour, 
every increased efficiency, whether due directly to these or to other 
causes, will enable higher wages to be paid and shorter hours to be 
worked. 

It should be clearly recognised that in the consideration of all 
practical reforms affecting the conditions of labour, the “wages” 
question cannot be dissociated from the “hours” question, nor both 
from the “intensity of labour” question; and that any endeavour to 
simplify discussion, or to facilitate “labour movements,” by seeking 
a separate solution for each is futile, because it is unscientific. When 
any industrial change is contemplated, it should be regarded, from the 
“labour” point of view, in its influence upon the net welfare of the 
workers, due regard being given, not merely to its effect upon wage, 
hours, and intensity, but to the complex and changing relations which 
subsist in each trade, in each country, and in each stage of industrial 
development between the three. 

c) SOME ATTEMPTS TO DEFINE SKILL AND “WORTH” 

i) “Skill” in the Men’s Clothing Industry. 1 

Skill is something which we all talk about but for which there is 
no standard definition. And it is difficult to define. We consider 
that it has reference to the following elements, viz.: (1) the character 
of the work elements that compose the whole operation, particularly 
the care with which they must be performed in order not to impair 
the quality of the product, together with the worker’s required knowl¬ 
edge and ability not only to judge effects after they have been produced 
but to foreknow them; (2) the complexity of the motions; (3) variation 
and complexity of the whole operation; (4) the type of operative 
that is adapted to the operation and the experience that he must 
have had in the organization in order to be properly qualified for the 
operation in question. An excellent example of this first element is 
in hand pressing, where the operative must be able not only to recog- 

1 Taken with permission from Frank J. Becvar, “A Method of Grading and 
Valuing Operations,” in Annals of the American Academy , pp. 15-16 (March, 1922). 


220 


THE WORKER IN MODERN ECONOMIC SOCIETY 


nize the quality of the effect he has produced, but to pre-judge this 
effect on each kind or texture of cloth and thereby know how to treat it. 

In determining the character and complexity of the motions that 
compose an operation as a whole, the careful analysis made by the time 
study observer is extremely valuable. The experienced time study 
observer is able to grade the elements from the character of his readings. 
The greater the number of difficult elements in the whole operation, 
the higher the grade. 

A good comparison to illustrate the meaning of the third element 
is the comparison of the relatively short, simple and uniform operation 
of sewing wigans or rectangular silesia pieces onto the bottoms of coat 
sleeves to stiffen them, with the lengthy, very complex and variable 
operation of “pocket making” in which the operative must know 
how to put in all kinds of pockets'—flap, horizontal welt, vertical 
welt with inlaid facing, slanting welt, crescent shaped pockets, piped 
edges, patch pockets and the like. 

Finally, some operations are of such character that the operative 
is not properly qualified to perform them unless he knows the work 
that has gone before or that is to follow. Several years’ work on other 
parts of the garment making process may be required of an operative 
before he can acquire the knowledge and understanding needed for 
the operation in question. General experience with operations as 
performed under the general conditions in the organization may also 
be essential. Furthermore, even without such versatility, some opera¬ 
tions involve a longer training period than others before the operative 
can come up to the standard rate of performance. 

Thus skill, as above defined and judged, and the length of time 
normally required to bring the operative up to full proficiency in the 
given operation, inclusive of the time required to learn operations that 
lead up to it, are the factors that govern the relative valuations of the 
various operations. On this basis all operations are divided into 
grades known as classes. The values of these classes progress with a 
common difference of 5 or 10 cents per hour from the operations of 
the lowest to those of the highest class. 

it) An Illustration from the Automobile Industry 1 

Two men may be classed as machinists, yet one will be of greater 
value than the other to the industry that employs him. The in¬ 
dividual differences that make that greater value are as follows: 

1 Taken with permission from R. M. Hudson, “Bases for Determining Wage 
Rates,” in Annals of the American Academy , pp. 27-29 (March, 1922). 


N MARKET FACTORS AND FORCES 221 

1. The relative rate of productivity or output is highly essential. 
If both men carry the same base rate, the faster of the two will be 
more of an asset than the other. It is conceivable, however, that both 
may be so slow in their performance as to be liabilities, for the costs 
of the work they do would be sadly out of proportion to the price 
obtainable for their products. It follows, then, that certain minimum 
standards of output must be established for which the base rate is 
fair compensation. That minimum output is easily deduced from a 
study of the probable maximum price obtainable, and the consequent 
maximum allowable cost for each component. Greater output than 
that standard can be rewarded by a direct return in the wage-rate 
of a share of the savings resulting from the lower costs effected by that 
higher productivity. The determination of the standards can be 
most scientifically accomplished through time studies, made under 
highly standardized conditions of operation. 

2. The tendency to speed up output, however, brings with it a 
greater risk of spoilage, and consequently the losses resulting must be 
shared by the worker responsible for them in a reduction in his indi¬ 
vidual rate proportional to those losses. It is thus possible for the 
worker to govern his rate of production so that he earns more than his 
class rate, and yet have little or no spoilage. He soon learns the 
relative value of speed and accuracy in their relation to his rate of 
earning. 

3. The worker who can do more than one particular thing is 
entitled to recognition for his versatility; for obviously he is of more 
value to his employer in that he provides the latter with a more 
flexible organization than he otherwise would have, and, consequently 
the annual labor turnover is lowered, and its expense lessened by 
reason of the worker’s greater ability. 

4. Recognition of the years of connected service of an employe 
has its value in stabilizing the industry and further lessening the costs 
of turnover. 

5. Regular attendance likewise is of value, for the losses due to 
idle machinery or interrupted routine are thus minimized. 

6. Good conduct and high cooperation from employes are of 
appreciable value to an employer, and though some may argue that 
“virtue is its own reward,” and that “custom does not give medals 
for honesty,” the influence of highly cooperative, self-governing 
employes is very helpful in obtaining a high efficiency of operations. 

These individual factors will have varying values with respect to 
each other, and according to the extent to which they contribute to 


222 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the success of different enterprises; but they should be recognized 
in every industry, for to the industry, these factors are the expression 
of the value of the individual and to the worker, they are direct and 
tangible means of achieving his desires. 

C. Underlying Market Forces 

6 . THE HIGGLING OF THE MARKET 1 

The higgling of the market, which, under a system of free competi¬ 
tion and individual bargaining, determines the conditions of employ¬ 
ment, occurs in a chain of bargains linking together the manual worker, 
the capitalist employer, the wholesale trader, the shopkeeper, and the 
customer. 

We begin with the bargain between the workman and the capitalist 
employer. We assume that there is only a single situation vacant and 
only one candidate for it. When the workman applies for the post to the 
employer’s foreman, the two parties to the bargain differ considerably 
in strategic strength. There is first the difference of alternative. 
If the foreman, and the capitalist employer for whom he acts, fail to 
come to terms with the workman, they may be put to some incon¬ 
venience in arranging the work of the establishment. Even if the 
Workman remains obdurate, the worst that the capitalist suffers is a 
fractional decrease of the year’s profit. Very different is the case with 
the wage-earner. If he refuses the foreman’s terms even for a day, 
he irrevocably loses his whole day’s subsistence. Sooner or later he 
must come to terms, on pain of starvation or the workhouse. And 
since success in the higgling of the market is largely determined by the 
relative eagerness of the parties to come to terms—especially if this 
eagerness cannot be hid—it is now agreed, even if on this ground alone, 
“ that manual laborers as a class are at a disadvantage in bargaining.” 

But there is also a marked difference between the parties in that 
knowledge of the circumstance which is requisite for successful higgling. 
“The art of bargaining,” observed Jevons, “mainly consists in the 
buyer ascertaining the lowest price at which the seller is willing to 
part with his object, without disclosing, if possible, the highest 
price which he, the buyer, is willing to give. The power of reading 
another man’s thoughts is of high importance in business.” Now the 
essential economic weakness of the isolated workman’s position, as 
we have just described it, is necessarily known to the employer and 

1 Adapted with permission from Sidney and Beatrice Webb, Industrial Democ¬ 
racy , pp. 654-57, 661-63, 665-66, 667-71. (Longmans, Green & Co., 1911.) 


MARKET FACTORS AND FORCES 


223 


his foreman. The isolated workman, on the other hand, is ignorant 
of the employer’s position. 

So far the argument that the isolated workman, unprotected by 
anything in the nature of Trade Unionism, must necessarily get the 
^ worst of the bargain, rests on the assumption that the capitalist 
employer will take full advantage of his strategic strength, and beat 
each class of wage-earners down to the lowest possible terms. In so 
far as this result depends upon the will and intention of each individual 
employer, the assumption is untrue. A capitalist employer who looks 
forward, not to one but to many years’ production, and who regards 
his business as a valuable property to be handed down from one 
generation to another, will, if only for his own sake, bear in mind the 
probable effect of any reduction upon the permanent efficiency of the 
establishment. He will know that he cannot subject his work-people 
to bad conditions of employment without causing them imperceptibly 
to deteriorate in the quantity or quality of the service that they render. 
Unfortunately, the intelligent, far-sighted, and public-spirited 
employer is not master of the situation. Unless he is protected, he 
is constantly finding himself as powerless as the workman to withstand 
the pressure of competitive industry. How this competitive pressure 
pushes him, in sheer self-defence, to take as much advantage of his 
work-people as the most grasping and short-sighted of his rivals, 
we shall understand by examining the next link in the chain. 

Paradoxical as it may appear, in the highly developed commercial 
system of the England of to-day the capitalist manufacturer stands 
at as great a relative disadvantage to the wholesale trader as the 
isolated workman does to the capitalist manufacturer. In the higgling 
of the market with the wholesale trader who takes his product, the 
capitalist manufacturer exhibits the same inferiority of strategic 
position with regard to the alternative, with regard to knowledge of 
the circumstances, and with regard to bargaining capacity. First, 
we have the fact that the manufacturer stands to lose more by failing 
to sell his product with absolute regularity, than the wholesale trader 
does by temporarily abstaining from buying. To the manufacturer, 
with his capital locked up in mills and plant, continuity of employment 
is all-important. If his mills have to stop even for a single day, he has 
irrevocably lost that day’s gross income, including out-of-pocket 
expenses for necessary salaries and maintenance. To the wholesale 
trader, on the other hand, it is comparatively a small matter that his 
stocks run low for a short time. His unemployed working-capital is, 


224 


THE WORKER IN MODERN ECONOMIC SOCIETY 


at worst, gaining deposit interest at the bank, and all he foregoes 
is a fraction of his profits for the year. Moreover, as the wholesale 
trader makes his income by a tiny profit per cent on a huge turnover, 
any particular transaction is comparatively unimportant to him. 

There is, moreover, another reason that makes the manufacturer 
yield to the constant nibbling at price, which forms so large a part 
of the art of the wholesale trader. In order that the manufacturer 
may make a profit on the year’s trading he must obtain for his output, 
not only enough to cover the outgoings for wages and raw material— 
the “prime cost” of the finished product—but also the standing 
charges of the manufactory, termed by Professor Marshall the 
“supplementary cost.” When a manufacturer is pressed to make a 
bargain at the lowest price, rather than see his mill stand idle, it is 
the “prime cost” which he thinks of as the minimum that he can 
accept without loss, since the standing charges will go on anyhow. 
Each manufacturer in turn prefers to sell at “prime cost” rather than 
not to get an order at all, with the result, as the saying is, of “spoiling 
the market” for themselves and their rivals alike. The standing 
charges have to be met somehow, and the harassed employer is forced 
to turn for relief to any possible cutting-down of the expenses of 
production, wages not excluded. Meanwhile, the wholesale trader 
sees no possible objection to the reduction he has effected. To him it 
is of no pecuniary consequence that a large proportion of the manu¬ 
facturers of a particular article are only just managing to cover its 
“prime cost,” and are thus really losing money, or that the workpeople 
in the hardest pressed mills or the least fortunate districts are, owing 
to a worsening of conditions, beginning to degrade in character and 
efficiency. If the product seriously falls off in quality relatively to 
the price demanded, he can go elsewhere; and he makes, moreover, 
quite as large a percentage on low-grade goods as on those of standard 
excellence. 

But we should make a mistake if we imagined that the pressure 
originated with the wholesale trader. Just as the manufacturer is 
conscious of his weakness in face of the wholesale trader, so the whole¬ 
sale trader feels himself helpless before the retail shopkeeper to whom 
he sells his stock. Here the inferiority is not in any greater loss that 
would arise if no business were done, for the retailer is impelled to 
buy by motives exactly as strong as those which impel the wholesale 
house to sell. Nor is it in any difference in bargaining power. In 
both these respects the wholesale house may even have the advantage 


MARKET FACTORS AND FORCES 


225 


over the shopkeepers. But the shopkeepers have a closer and more 
up-to-date knowledge of exactly what it is that customers are asking 
for, and, what is far more important, they can to some extent direct 
this demand by placing, before the great ignorant body of consumers, 
one article rather than another. They have, therefore, to be courted 
by the wholesale trader, and induced to push the particular “lines” 
that he is interested in. But there has been, for the last half century, 
a constant tendency towards a revolution in retail trade. In one town 
or one district after another there grow up, instead of numberless 
little shops, large retail businesses, possessing as much capital and 
commercial knowledge as the wholesale house itself, and able to give 
orders that even the wealthiest manufacturers are glad to receive. 
Hence the wholesale house stands in constant danger of losing its 
clients, the smaller ones because they cannot buy cheaply enough 
to resist the cutting prices of their mammoth rivals, and these levia¬ 
thans themselves because they are able to do without their original 
intermediaries. The wholesale trader’s only chance of retaining 
their custom is to show a greater capacity for screwing down the 
prices of the manufacturers than even the largest shopkeeper possesses. 
He is therefore driven, as a matter of life and death, to concentrate 
his attention on extracting, from one manufacturer after another 
a continual succession of heavy discounts or special terms of some kind. 
This, then, is the fundamental reason why the manufacturer finds the 
wholesale trader so relentless in taking advantage of his strategic 
position. Though often performing a service of real economic advan¬ 
tage to the community, he can only continue to exist by a constant 
“squeezing” of all the other agents in production. 

We come now to the last link in the chain, the competition between 
retail shopkeepers to secure customers. Here the superiority in 
knowledge and technical skill is on the side of the seller, but this is 
far outweighted by the exceptional freedom of the buyer. 

We thus arrive at the consumer as the ultimate source of that 
persistent pressure on sellers, which, transmitted through the long 
chain of bargainings, finally crushes the isolated workman at the base 
of the pyramid. Yet, paradoxical as it may seem, the consumer is, 
of all the parties to the transaction, the least personally responsible 
for the result. For he takes no active part in the process. In the 
great market of the world, he but accepts what is spontaneously 
offered to him. He does not, as a rule, even suggest to the shopkeeper 
that he would like prices lowered. All he does—and it is enough to 


226 


THE WORKER IN MODERN ECONOMIC SOCIETY 


keep the whole machine in motion—is to demur to paying half a crown 
for an article, when some one else is offering him the same thing for 

two shillings. It may be urged that he ought to be ready to pay a 

* 

higher price for a better quality. As a matter of fact, consumers, 
whether rich or poor, do strive, in an almost pathetic way, after some 
assurance of specific quality that would reconcile them to paying the 
higher price. They recognise that their own personal experience of 
any article is too casual and limited to afford any trustworthy guidance, 
and they accordingly exhibit a touching faith in “authority” of one 
kind or another. Tradition, current hearsay as to what experts 
have said, and even the vague impression left on the mind by the 
repeated assertions of mendacious advertisements, are all reasons 
for remaining faithful to a particular commodity, a particular brand 
or mark, or even a particular shop, irrespective of mere cheapness. 

7. DOES “INDIVIDUAL BARGAINING” STILL 

EXIST P 1 

In the words of the National Conference of State Manufacturers’ 
Associations, all people “have the right to work when they please, 
for whom they please, and on whatever terms are mutually agreed 
upon between employee and employer.” These are noble words. 
They presuppose a society of unlimited rights exercised without 
hindrance by the standard of individual pleasure. 

Let us imagine this utopia in action. John Smith, it happens, is 
pleased one fine morning to take a job. It occurs to him that he 
* would rather enjoy driving the Twentieth Century Limited. So he 
walks into the office of the president of the New York Central Railroad 
and says: “ It pleases me to work for you this morning. The train to 
be sure does not ordinarily start until 2:45, but I’ll start now. I work 
when I please.” “Right you are,” says the president, “let us now 
mutually agree on terms. What’ll you take for the job ?” “Well,” 
says John Smith, “Chicago does not interest me much, but I shall 
enjoy the ride. Let’s make it an even twenty.” “Too much,” 
says the president. “I generally pay about ten.” “Hm,” says 
John Smith, “I tell you. Let’s split the difference.” “Fine,” says 
the president, “in our country it is recognized as fundamental that we 
work when we please, for whom we please, and on whatever terms are 
mutually agreed upon.You say you will start at once?” 

1 Adapted with permission from an editorial in the New Republic, Vol. XXV, 
No. 321 (January 26, 1921), p. 243. 



MARKET FACTORS AND FORCES 


227 


“Almost at once,” says John. “I’ve got just thirty pages of the 
Age of Innocence to finish, and a luncheon engagement at the Club 
to call off; I’ll be ready around eleven.” 

Having stopped for a shave and a shine, John did not actually 
start till twelve-thirty. As the train sped up the Hudson Valley he 
drank in the air and thought that except in a Veronese at the Pitti 
and in two bits of early Ming that he had so loved when he was staying 
at Albemarle House with Margot and Colonel Repington, he had 
never seen such a celestial blue. Colonel Repington suddenly 
reminded him of lunch, and at Poughkeepsie he stopped. About five 
o’clock, lunch being over, John strolled down to the train, slowly 
finishing his excellent cigar. Towards seven he pulled into Albany, 
and took a cab to the Ten Eyck, where he thought he would change for 
dinner. A telegram from the perspicacious president was brought to 
him. It read: “Forgive the unwarranted intrusion upon your 
private affairs. A harsh and meddlesome government has been 
inquiring all afternoon when the mails are likely to reach Chicago. 
I realize that you work only when you please and for whom you 
please, but as one man to another, won’t you advise me of your 
plans.” 

John thought this over for an hour or two, reflecting sadly on the 
increasing restriction of liberty. On sober second thought he felt 
that he had better decide the question in the morning, when he was 
fresh from a good night’s sleep. So he turned in, renewed his shaken 
spirits by reading a few resonant passages from the Weekly Review, 
and fell asleep, only to find himself in the midst of the wildest and most 
hideous nightmare. 

As is usual in such dreams some features of the previous day’s 
experience were reproduced, though distorted. He went in search of 
a job. But instead of finding his employer, the president, he was 
shunted from porters to ticket agents, and from ticket agents to 
employment offices, and from there to a long line of waiting men. 
Finally he was interviewed. His desire to run the Twentieth Century 
that afternoon was greeted with a roar of irreverent laughter, but he 
was told that he could try out as the second assistant helper on the 
local freight between Jericho and Mineola. He would report at six 
a.m. The wages were $4.32. What, he didn’t like this ? He wanted 
to work when he pleased, for whom he pleased, on terms mutually 
agreed upon ? He was welcome to try somewhere else. This was a 
free country, to be sure, but not for nuts. In the futile and exasperat- 


228 


THE WORKER IN MODERN ECONOMIC SOCIETY 


ing manner of dreams, he repeated all this several times, being shunted 
about, standing in line, being told to take it or leave it. 

Whether John’s experience or John’s nightmare is nearer to the 
facts as they exist in 1921, we do not commit ourselves. But on the 
off chance that John’s nightmare might conceivably be true in two 
or three backward spots, we venture to set down the belief that it is 
necessary to consider not only whether “rights” exist, but whether 
anyone can today exercise them. A right on which men cannot act 
is as valuable as property on the moon. And today standards of 
employment, of discipline, of production, of pay and of hours are no 
longer matters of individual fancy, but have to be fixed for whole 
industries. 

8. THE LEVELING FORCE OF THE MACHINE 1 

The automatic machine levels wages and distributes labor as 
between the factory, home and mills, but in much the same way, the 
spreading use of automatic machinery tends to level wages in all 
plants so equipped, though hindered at many points by special condi¬ 
tions and special labor contracts. Certain automatic machines are 
widely scattered, and can be found in every industrial centre. Many 
others present family likenesses. Even the greenest of green workers 
needs but short tutelage at his assigned machine; while the man who 
knows how much—or rather how little—is expected of him, can shake 
down quickly into efficient production. This means that a worker 
can shift from one line of production to another without grave loss of 
time. He may be a woodcutter or harvest hand this month, and a 
producer of automobile parts the next. If of a roving disposition, 
in a single year he may can salmon on the Pacific Coast, pour cement 
on an irrigation dam in Idaho, mill flour in Minnesota, cut pearl 
buttons in Iowa, mould iron in Ohio, weave silk in Jersey, and make 
rubber tires in New England. If this is not an exact statement at 
this writing, it is fast coming true, as skill is more and more transferred 
from man to machine. The outcome of such easy transitions must be 
a highly efficient distribution of labor-power on the one hand, and, 
on the other, a progressive leveling of wages as among all automatized 
industries. “The old trade-demarcations,” says Lloyd, “have 
largely ceased to exist; and with their passing the old differences of 
pay have correspondingly declined.” 

1 Adapted with permission from Arthur Pound, The Iron Man in Industry , 
pp. 18-25. (The Atlantic Monthly Press, 1922.) 


MARKET FACTORS AND FORCES 229 

This leveling tendency, moreover, is no respecter of sex. Since 
women can tend many automatic tools as well as men, it follows that 
the wages of the two sexes must draw together. They may never 
reach uniformity, because many women view jobs as temporary 
stop-gaps on the road to marriage, and this handicaps them as yet 
in the eyes of many employers. This, and kindred non-economic 
considerations, may affect the result; but they cannot stop the drift 
toward the equality of wage. It is no unusual thing, even now, to 
find a young wife earning as much as, or more than, her husband. 
As time goes on, this will become too common to command notice. 

Likewise, automatic machinery tends to break down the former 
disparity of wage as between age and youth. Children of twelve 
can tend many automatic machines as competently as adults. 
Youths, in fact, approach their highest wage during the very years in 
which the boys of a generation ago were earning less than living wages 
as apprentices. Eighteen to twenty-five are the most gainful years 
for the machinate mammal. 

The leveling proceeds with ruthless disregard for race or nation¬ 
ality. While a knowledge of the native tongue may be desirable, 
it is by no means essential. Witness the widespread employment of 
our newly arrived immigrants on automatic machines, their earnings 
on a par with those of native-born products of our public schools. 
Notwithstanding that the color-line rarely gives the negro a chance 
at automatics, the black populations of our northern industrial 
cities increased faster than the white populations from 1910 to 1920. 
Bringing black labor north became a highly organized enterprise. 
The pay for negroes, generally speaking, maintained a parity with 
white labor on the same kind of work; and while blacks are not often 
put on machines, there is no doubt that many blacks can fill the 
requirements of machine attendance. 

Automatic machines in offices affect the “white-collar” group in 
industry precisely as shop-workers are affected. With adding 
machines and other mechanisms, and standardized office-systems, 
need for special skill is decreasing among office-workers. The old- 
fashioned bookkeeper, the aristocrat of fin-de-siecle offices, is fast 
becoming as obsolete a type as the old-fashioned mechanic, the one- 
lime aristocrat of the shops. Stenographic skill is subject to the 
competition of the phonograph; the typist is entering into competition 
with the duplicating typewriter. Meanwhile, public schools and busi¬ 
ness colleges are producing an abundance of persons sufficiently 


230 


THE WORKER IN MODERN ECONOMIC SOCIETY 


educated for the simplified office tasks. In addition, the higher social 
status enjoyed by such workers can be depended upon to furnish 
surplus labor for such activities in ordinary times; with the result 
that we pay practically the same rate to washerwomen and typists; 
also to cooks and stenographers, when board-and-lodging costs are 
considered. These influences tended to bring office-work down to the 
wage level of factory-work before the war; as office-workers began to 
go over into the ranks of factory-workers, owing to war-wage rates in 
the factories, office-wages began to rise. From this time on, owing to 
the fact that labor can flow from one group to the other more easily 
than ever before, disparity of wage between the two groups will tend 
to correct itself promptly. 

So far as the technical experts—chiefly chemists and engineers— 
are concerned, the situation is fairly clear. They are being turned 
out in such numbers by colleges and universities that, except in sudden 
bursts of industrial expansion, the supply tends to outrun the demand. 
There is no wide rift between the pay of a Bachelor of Science, just 
out of college, and the pay of a factory operative. A city-engineering 
department can hire draughtsmen about as cheaply as common laborers. 
All institutions of higher learning are growing in attendance, particu¬ 
larly in the technical branches. Also, the training tends to become 
more thorough, hence more productive of men fitted to move in the 
highest circles of industrial production. From all indications, 
universities and colleges are as apt to flood the market with engineers 
and chemists as the mothers of the country are to flood it with unskilled 
labor. Public education, therefore, tends to level toward the general 
average the pay for such service. 

9. THE INFLUENCE OF THE BUSINESS CYCLE 1 

Into the sweep of the changes which follow hard upon one another 
when business revives from depression there is presently drawn even 
the least businesslike section of the community—the wage-workers 
whom we habitually think of not as making money but as making 
a living. For reasons of peculiar interest the changes which take place 
in their rates of pay do not run parallel with the changes in the prices 
fixed for commodities by dealings between business enterprises. 
The results which flow from this inaccurate adjustment in their 
turn become new factors of great weight not only in determining the 
material well-being of large numbers of men—a matter with which 

1 Adapted with permission from W. C. Mitchell, Business Cycles, pp. 464-66. 
(University of California, 1913.) 


MARKET FACTORS AND FORCES 


231 


business as such is not concerned—but also in determining the market 
for consumers’ goods and the margins of profit between the selling 
prices of all sorts of commodities and the labor costs of providing them. 

Both American and British statistics confirm the prevailing opinion 
that in times of business revival the prices of labor rise less than the 
prices of commodities at wholesale. The American figures are confined 
to wages in manufacturing industries, but the British figures indicate 
that wages in agriculture are even more sluggish in their movements. 

Less well known is the fact that the advance often begins sooner 
in the labor than in the commodity markets. Yet both in the United 
States and in Great Britain wages began to rise after the depression 
of the middle nineties before wholesale prices had touched their lowest 
point. The evidence for the second decade is less conclusive. The 
crisis of 1903-1904 was not sufficiently severe in America to cause a 
reduction of wages. In England the crisis of 1900 was followed by 
wage-reductions, and in the later revival wholesale prices advanced 
not only farther but also earlier than the prices of labor. 

The reason why wages rise less than wholesale prices is found 
principally in the unlike organization of the labor and commodity 
markets. Where trade unions are non-existent or weak the individual 
laborers have neither the prompt knowledge of changes in business 
conditions necessary to determine what employers can afford to pay 
for labor, nor the power to enforce such demands as are not readily 
conceded. As an organization for collective bargaining, the trade 
union improves the wage-earners’ position in these respects. 

But many unions seek to make wage-contracts running for a 
considerable time and binding the men not to ask for fresh advances 
until the contracts have expired. Most important of all, the individual 
working-man, the trade union, and the employer are much more under 
the dominion of the idea of a just price than are the business men 
dealing in commodities. This survival from the relatively stable 
economic life of the middle ages has almost ceased to influence the 
prices men offer or accept for cotton, wheat, or iron;—such com¬ 
modities are “worth what they will bring.” But there still persists 
in the minds of all the parties in the labor market certain notions of 
what is a proper wage for a day’s labor. When the employer offers 
much less than the customary price, he arouses stubborn resistance 
which is reinforced by the whole community’s commonsense that the 

work is worth more, or that a man cannot support his family decently 

' • 

on such a sum. On the other hand, when working-men ask much 
more than the customary prices, their pretensions strike others as 


232 THE WORKER IN MODERN ECONOMIC SOCIETY 

absurd. Of course, such feelings impede the free working of supply 
and demand in the labor market—or rather constitute an important 
feature of both supply-price and demand-price—and tend to keep 
wages more stable than are prices in markets where pecuniary motives 
have unrestricted sway. 

If these conditions obstruct the rapid rise of wages when business 
revives, they also facilitate the restoration of wages to the customary 
levels when a depression accompanied by wage-reductions is passing 
away. Such is the explanation of the celerity with which wages rose 
after the hard times in the nineties. Early in the movement toward 
increase of activity in the United States before a revival could fairly 
be spoken of, employers conceded a slight increase of pay. That 
English employers did not follow the same course in the revival of 
1904-6 may be due to the fact that the unprecedentedly high rates 
which the men had secured before the crisis of 1900 had not been 
paid long enough to become fairly entrenched in the minds of masters 
and men as the fit and proper prices to be charged. Hence they 
yielded with unaccustomed ease to the pressure of hard times after 
the crisis and were restored in the subsequent period of prosperity 
with unaccustomed difficulty. 

It must also be said that the economic pressure which drives the 
great mass of wage-earners to sustain their arduous struggles for higher 
wages relaxes just at the time when rapid' increases might be wrung 
from employers. The relatively moderate rate at which retail prices 
rise in the earlier stages of revival prevents the cost of living from 
going up fast. On the other hand, the economic position of working 
men is being improved by the greater regularity of employment and 
the abolition of “short time.” Even without any increase in their 
rates of pay the wage-earning class is better off. They hesitate to 
demand an increase of their customary wages until the feeling of this 
relative prosperity is dulled by familiarity, until the cost of living has 
advanced seriously, and until personal savings or trade-union accumu¬ 
lations have put them in position to fight with vigor. 

10. IMMIGRATION AND THE LABOR MARKET 

a) AN OFFICIAL VIEW 1 

A large proportion of the southern and eastern European immigra¬ 
tion of the past twenty-five years has entered the manufacturing 

and mining industries of the eastern and middle western states, 

• 

1 Adapted from Conclusions and Recommendations of the Immigration Com¬ 
mission, pp. 29-30. (Document No. 783. Government Printing Office, Washing¬ 
ton, 1911.) 



MARKET FACTORS AND FORCES 


233 


mostly in the capacity of unskilled laborers. There is no basic industry 
in which they are not largely represented and in many cases they com¬ 
pose more than 50 per cent of the total number of persons employed 
in such industries. Coincident with the advent of these millions of 
unskilled laborers there has been an unprecedented expansion of the 
industries in which they have been employed. Whether this great 
immigration movement was caused by the industrial development or 
whether the fact that a practically unlimited and available supply 
of cheap labor existed in Europe was taken advantage of for the 
purpose of expanding the industries, cannot well be demonstrated. 
Whatever may be the truth in this regard it is certain that southern 
and eastern European immigrants have almost completely monopolized 
unskilled labor activities in many of the more important industries. 
This phase of the industrial situation was made the most important 
and exhaustive feature of the Commission’s investigation, and the re¬ 
sults show that while the competition of these immigrants has had little, 
if any, effect on the highly skilled trades, neverthless, through lack of 
industrial progress and by reason of large and constant re-enforcement 
from abroad, it has kept conditions in the semiskilled occupations from 
advancing. 

Several elements peculiar to the new immigrants contributed to 
this result. They came from countries where low economic conditions 
prevailed and where conditions of labor were bad. They were content 
to accept wages and conditions which the native American and immi¬ 
grants of the older class had come to regard as unsatisfactory. They 
were not, as a rule, engaged at lower wages than had been paid to the 
older workmen for the same class of labor, but their presence in con¬ 
stantly increasing numbers prevented progress among the older 
wage-earning class, and as a result that class of employees was gradu¬ 
ally replaced. An instance of this displacement is shown in the 
experience in the bituminous coal mines of western Pennsylvania. 
This section of the bituminous field was the one first entered by the 
new immigrants, and the displacement of the old workers was soon 
under way. Some of them entered other occupations and many of 
them migrated to the coal fields of the middle west. Later these 
fields were also invaded by the new immigrants, and large numbers of 
the old workers again migrated to the mines of the southwest, where 
they still predominate. The effect of the new immigration is clearly 
shown in the western Pennsylvania fields, where the average wage of 
the bituminous coal worker is 42 cents a day below the average wage 
in the middle west and southwest. Incidentally, hours of labor are 


234 


THE WORKER IN MODERN ECONOMIC SOCIETY 


longer and general working conditions poorer in the Pennsylvania 
mines than elsewhere. Another characteristic of the new immigrants 
contributed to the situation in Pennsylvania. This was the impossi¬ 
bility of successfully organizing them into labor unions. Several 
attempts at organization were made, but the constant influx of immi¬ 
grants to whom prevailing conditions seemed unusually favorable con- 
contributed to the failure to organize. A similar situation has pre¬ 
vailed in other great industries. 

Like most of the immigration from southern and eastern Europe, 
those who entered the leading industries were largely single men or 
married men unaccompanied by their families. There is, of course, in 
practically all industrial communities a large number of families of 
the various races, but the majority of the employees are men without 
families here and their standard of living is so far below that of the 
native American or older immigrant workman that it is impossible 
for the latter successfully to compete with them. Immigrant families 
in the industrial centers are more permanent and usually exhibit a 
stronger tendency toward advancement, although, in most cases, it 
is a long time before they even approach the ordinary standard of the 
American or the older immigrant families in the same grade of occupa¬ 
tion. This description, of course, is not universally true, but it fairly 
represents a great part of the recent immigrant population in the 
United States. Their numbers are so great and the influx is so 
continuous that even with the remarkable expansion of industry 
during the past few years there has been created an over supply of 
unskilled labor, and in some of the industries this is reflected in a 
curtailed number of working days and a consequent yearly income 
among the unskilled workers which is very much less than is indicated 
by the daily wage rates paid; and while it may not have lowered 
in a marked degree the American standard of living, it has introduced 
a lower standard which has become prevalent in the unskilled in¬ 
dustry at large. 

b) AN ORGANIZED LABOR VIEW 1 

The standard of wages for both skilled and unskilled labor in the 
United States has been built up as a result of years and years of 
energetic effort, struggle and sacrifice. When an immigrant without 
resources is compelled to accept work at less than the established 
wage rate, he not only displaces a man working at the higher rate but 

1 Taken from an article by John Mitchell, reprinted in Senate Document 804, 
1911, pp. 8, 9, 11. 


MARKET FACTORS AND FORCES 


235 


his action threatens to destroy the whole schedule of wages in the 
industry in which he secures employment, because it not infrequently 
occurs that an employer will attempt to regulate wages on the basis 
of the lowest rate paid to any of the men in his employ. Any reduction 
in wages means a lowering of the standard of living and the standard 
of living among a civilized people cannot be lowered without lowering 
in the same ratio the physical standard and the intellectual and moral 
ideals of that people. 

Of course it may be said that this observation is not borne out by 
the experience and the history of our country. It is admittedly 
true that our population is largely an immigrant population, and that 
the standard of living has gradually tended higher; but in considering 
the influence and effects of stimulated immigration it is necessary 
to contrast conditions now with conditions prevailing in the past, and 
also to keep in mind the change that has taken place in the extent and 
the character of the immigration. 

If the number of aliens coming annually to the United States 
were no greater now than in any year between 1820 and 1880, there 
would be and could be no reasonable ground for complaint; indeed, 
there would be little demand from wage earners for the enactment of 
laws restricting immigration if the number of aliens arriving did not 
exceed the number admitted in any year up to 1900, provided, of 
course, that such aliens were not brought here as contract laborers of 
were not physically, mentally, or morally defective. 

That immigration in recent years has been stimulated beyond the 
line of assimilative possibility will be apparent even to the casual 
observer when the volume of immigration at the present time and in 
the recent past is compared with the number of immigrants who arrived 
here during the first 80 years for which statistics have been tabulated. 
For illustration, more aliens were admitted through our ports in one 
year, 1907, than were admitted during the entire 24 years from 1820 
to 1843, inclusive, and nearly as many aliens were admitted in the 5 
years from 1904 to 1908, inclusive, as were admitted during the 40 
years from 1820 to 1859, inclusive. 

That there is an inseparable relation between unemployment and 
immigration is demonstrated by the statistics which are available 
upon the subject. There are, of course, no complete data showing 
the extent and effects of unemployment, but from the records of 27 
national and international trade unions it is found that during the year 
1908 from 10 to 70 per cent of the members of various trades were 


236 


THE WORKER IN MODERN ECONOMIC SOCIETY 


in enforced idleness for a period of one month or more. These 27 
unions are selected from the highly skilled trades, in which organization 
is most thorough and systematic. Their records show that an average 
of 32 per cent of the total membership was unemployed. If this ratio 
applied to other organizations it would indicate that approximately 
1,000,000 organized workmen were without employment during the 
past year. Assuming that unemployment affected the unskilled and 
unorganized wage-earners in the same proportion, it would mean that 
2,500,000 wage-earners were unemployed; and while there has been 
a marked improvement in industrial conditions during the past few 
months, it will not be contended that unemployment is not still a seri¬ 
ous problem, and the cause of great and general suffering. Indeed, it is 
perfectly safe to say that unskilled and unorganized workmen suffered 
more from unemployment, both as to the proportion who were so 
unemployed and in actual physical and mental distress, because the 
organized workman, in most instances, had built up in normal times 
a fund upon which he could draw to tide him over his emergency; 
whereas the unskilled and unorganized workmen—many of whom are 
recently arrived immigrants—were forced to depend upon charity 
or upon the munificence of their friends to carry them over the 
industrial crisis. 


. See also Selection 13, chapter vi: Racial Elements in Our Popu¬ 
lation. 


PROBLEMS 

1. Is there any difference between wages and salaries? If there is, has 
it any practical importance ? 

2. What are the distinctions between labor and commodities? 

3. Is labor becoming more or less mobile ? Justify your answer. 

4. “ The regularity or irregularity of work is a most important consideration 
in comparing the advantages of different occupations.” Why? Does 
it have any effect on wages ? 

5. What is the difference between wages and labor cost ? Has it any 
practical importance ? 

6. Do higher wages mean higher prices ? 

7. “ The opportunity of training and entry into trades is then the important 
influence and the fundamental reason for the difference in the wages of 
different occupations.” Do you agree ? If you do, show just how the 
statement is true. 

8. “There are several kinds of immobility which interfere with the free 
flow of labor: among them geographical immobility, economic immo¬ 
bility and social immobility.” What does each of these terms mean? 



MARKET FACTORS AND FORCES 


237 


9. “Organized labor usually wishes to standardize wages.” “Modern 
management tends to standardize wages.” “The forces of the market 
tend to standardize wages over large areas.” Does “standardization” 
mean the same thing in each case ? 

10. Suggest as many ways as possible in which the machine has affected 
wages. 

11. What does Mr. Hobson mean by the “economy of high wages”? 
What factors determine its applicability as a policy ? 

12. “Any endeavor to simplify discussion by seeking a separate solution 
of the wages, hours and intensity of work questions is futile because 
unscientific.” What does this statement mean ? 

13. “Large-scale organization of industry is a distinct advantage to the 
worker. It stabilizes the market and minimizes sudden shifts due to 
technological change.” Do you agree ? 

14. “The wage, ‘bargain’ has become purely mythical. Large-scale 
production has eliminated it.” What do you think of this statement ? 

15. The war drastically reduced immigration, and Congress has since 
enacted laws which promise to perpetuate that reduction. What 
effect, if any, do you think this will have on wages? What factors 
have to be considered in working out a tentative answer ? 

16. “The fundamental difference between the position of the worker of 
today and the worker of yesterday may be expressed by saying that his 
income has become a function of the market instead of a function of 
divine law.” What does this statement mean ? To what extent is it 
true? 

17. What is the difference between the medieval “just price” and the 
modern “fair day’s pay for a fair day’s work”? Is there any differ¬ 
ence of principle, or are both purely matters of customary determin- 
tion ? 


CHAPTER VIII 

A SURVEY OF WAGE THEORY 

The purpose of the present chapter is twofold: to review briefly 
some views about wages which have obtained in the recent past and 
the present; and to inquire what standards, if any, are available for 
the wise determination of wages today. The chapter is divided into 
two parts corresponding roughly to these purposes. 

No pretense is made in the first part of presenting an exhaustive 
analysis of the various older wage “theories”: that lies outside the 
scope of our present study. There are, however, ample reasons for 
examining them briefly here as an introduction to a consideration of 
present-day standards of judgment. 

Among many possible lines of approach to their consideration, 
three might be indicated. The first has to do with their respective 
adequacy for the purpose they were intended to serve, that of present¬ 
ing in proper perspective the operation of the market forces deter¬ 
mining the distribution of income among the various “factors” of 
production: land, labor, and capital. How accurate is each in evalu¬ 
ating the relative strength of the various forces which determine wages ? 
How true are the assumptions from which each argues ? Assuming 
that any one describes fairly truthfully certain general tendencies, 
what qualifications, if any, would be necessary to make it fit the 
facts? In what sense can they be regarded as “laws” ? 

A second type of inquiry might concern itself with the tradition 
which the classical theories may be regarded as having helped to 
establish. To what extent have their assumptions, whether true or 
false, grown unconsciously into our everyday thinking about wages, 
and consequently into our business practice? To what extent is 
it true, as sometimes charged, that they have lent themselves to 
“rationalization” and hence to justification of whatever state of 
affairs existed at the time they were formulated ? 

Still a third approach to a study of wage theory might raise 
a series of problems somewhat outside the limits of the questions 
which the classical formulas set themselves to answer; problems relat¬ 
ing to the possibility of consciously controlling wages in the light of 
definite social aims. Granted that wages are, somehow, governed 
largely by market forces (or “supply and demand”), to what extent 

238 


A SURVEY OF WAGE THEORY 


239 


are these forces capable of manipulation and direction ? Both demand 
and supply elements are in fact controlled in some measure in the 
actual world, as for example by manufacturers’ organizations and 
trade unions. Not only must this fact be taken account of in the 
formulation of pictures of the process of income distribution; it 
must also be considered from the point of view of social and business 
policy. To what extent are existing forms of control wise? To 
what extent might other types of control, designed for definite pur¬ 
poses, be either possible or desirable ? 

This last type of inquiry, it will be seen, involves the further 
question of determining standards of judgment by which the wisdom 
of control might be gauged. What would be the effects on society 
and on production of a different basis of compensation from the one 
now followed? How determine the justice or expediency or wisdom 
of compensation as among different individuals ? In short, so far as 
wages are concerned, what results are our present institutions expected 
to accomplish, and how well do they perform their task ? If they 
have weaknesses, what means are available for dealing with them ? 

Through most of the nineteenth century, since “natural laws” 
were assumed to govern the whole process, often no distinction was 
made among these various types of issues. Frequently the same is 
true today: the market is accepted unquestioningly as the ethical and 
political as well as the economic arbiter. As a result of many social 
influences, however, this situation seems to be changing, and various 
“standards” for wage adjustment are being proposed and used. 
The second part of this section furnishes an introduction to some of 
these possible standards. In so far as they can be reduced to concrete 
form some of them are more explicitly defined in the later chapters 
of this part. Much more will be seen of them in the remaining 
parts of the book. 

A. Some Systematic Wage Theories 
1. THE SUBSISTENCE THEORY OF WAGES (RICARDO, 1817 1 ) 

Labour, like all other things which are purchased and sold, and 
which may be increased or diminished in quantity, has its natural and 
its market price. The natural price of labor is that price which is 
necessary to enable the laborers, one with another, to subsist and to 
perpetuate their race, without either increase or diminution. 

1 Adapted with permission from David Ricardo, The Principles of Political 
Economy and Taxation, pp. 52-53- (Everyman Ed., E. P. Dutton & Co.) 


240 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The power of the laborer to support himself, and the family which 
may be necessary to keep up the number of laborers, does not depend 
on the quantity of money which he may receive for wages, but on the 
quantity of food, necessaries, and conveniences become essential to 
him from habit which that money will purchase. The natural price 
of labour, therefore, depends on the price of the food, necessaries, 
and conveniences required for the support of the laborer and his 
family. With a rise in the price of food and necessaries, the natural 
price of labor will rise; with the fall in their price, the natural price of 
labor will fall. 

With the progress of society the natural price of labor has always 
a tendency to rise, because one of the principal commodities by which 
its natural price is regulated has a tendency to become dearer from the 
greater difficulty of producing it. As, however, the improvements in 
agriculture, the discovery of new markets, whence provisions may be 
imported, may for a time counteract the tendency to a rise in the price 
of necessaries, and may even occasion their natural price to fall, so 
will the same causes produce the correspondent effect on the natural 
price of labor. 

The market price of labor is the price which is really paid for it, 
from the natural operation of the. proportion of the supply to the 
demand; labor is dear when it is scarce and cheap when it is plentiful. 
However much the market price of labor may deviate from its natural 
price, it has, like commodities, a tendency to conform to it. 

It is when the market price of labor exceeds its natural price that 
the condition of the laborer is flourishing and happy, that he has it 
in his power to command a greater proportion of the necessaries and 
enjoyments of life and therefore to rear a healthy and numerous family. 
When, however, by the encouragement which high wages give to the 
increase of population, the number of laborers is increased, wages 
again fall to their natural price, and indeed from a reaction sometimes 
fall below it. 

When the market price of labor is below its natural price, the 
condition of the laborers is most wretched: then poverty deprives 
them of those comforts which custom renders absolute necessaries. 
It is only after their privations have reduced their number, or the 
demand for labor has increased, that the market price of labor will 
rise to its natural price, and that the laborer will have the moderate 
comforts which the natural rate of wages will afford. 

Notwithstanding the tendency of wages to conform to their 
natural rate, their market rate may, in an improving society, for an 


A SURVEY OF WAGE THEORY 


241 


indefinite period, be constantly above it; for no sooner may the impulse 
which an increased capital gives to a new demand for labor be obeyed, 
than another increase of capital may produce the same effect; and 
thus, if the increase of capital be gradual and constant, the demand 
for labor may give a continued stimulus to an increase of people. 

2. A STATEMENT AND CRITICISM OF THE WAGE- 
FUND THEORY (F. A. WALKER, 1876 )' 

The doctrine of the wage-fund is in substance as follows: 

There is, for any country, at any time, a sum of wealth set apart 
for the payment of wages. This fund is a portion of the aggregate 
capital of the country. The ratio between the aggregate capital and 
the portion devoted to the payment of wages is not necessarily always 
the same. It may vary, from time to time, with the conditions of 
industry and the habits of the people; but at any given time the 
amount of the wage-fund, under the conditions existing, is determined 
in the amount of capital. 

The wage-fund, therefore, may be greater or less at another time, 
but at the time taken it is definite. The amount of it cannot be 
increased by force of law or of public opinion, or through sympathy 
and compassion on the part of employers, or as the result of appeals 
or efforts on the part of the working classes. 

The sum so destined to the payment of wages is distributed by 
competition. If one obtains more, another must, for that reason, 
receive less, or be kept out of employment altogether. Laborers are 
paid out of this sum, and out of this alone. The whole of that sum 
is distributed without loss; and the average amount received by each 
laborer is, therefore, precisely determined by the ratio existing between 
the wage-fund and the number of laborers, or, as some writers have 
preferred to call it, between capital and population. 

The wage-fund having at any given time been determined for that 
time, the rate of wages will be according to the number of persons 
then applying for employment. If they be more, wages will be low; 
if they be fewer, wages will be high. 

The doctrine of the wage-fund has found wide acceptance on both 
sides of the Atlantic. The natural history of the notion on which it 
rests is not obscure. It grew out of the condition of affairs which 
existed in England during and immediately subsequent to the Napole¬ 
onic wars. Two things were then noted. First, capital had become 

1 Adapted with permission from Francis A. Walker, The Wages Question, 
pp. 138-44, 128-32. (Henry Holt & Co., 1891.) 


242 


THE WORKER IN MODERN ECONOMIC SOCIETY 


accumulated in the island to such an extent that employers found no 
(financial) difficulty in paying their laborers by the month, the week, 
or the day, instead of requiring them to await the fruition of their labor 
in the harvested or marketed product. Secondly, the wages were, 
in fact, generally so low that they furnished no more than a bare 
subsistence, while the employment offered was so restricted that an 
increase in the number of laborers had the effect to throw some out 
of employment or to reduce the rate of wages for all. Out of these 
things the wage-fund theory was put together. Wages are paid out 
of capital, and the rate is determined by the ratio between capital and 
population. 

Both the facts observed were accidental, not essential. Wages in 
England were paid out of capital because capital had become abundant, 
and employers could just as well not pay their laborers as soon as the 
service was rendered. In the United States, at the same time, employ¬ 
ers were paying their laborers larger wages, but obliging them to wait 
for the whole or a considerable part till the product should be harvested 
or marketed. In the United States, therefore, the industrial conditions 
were more favorable to the payment of wages, while in England the 
financial conditions were more favorable. But it is the industrial 
conditions which determine the amount of wages, the necessaries, 
comforts, and luxuries which the laborer receives; the financial 
conditions only determine the manner and time of payment, whether 
at once or at a future day, whether in money or in goods, etc. 

Again, the fact that in England, at the time this doctrine sprang up, 
an increase of the number of laborers applying for employment 
involved, as it doubtless did, a reduction in the rate of wages, was due 
to the circumstance that English agriculture, in the then existing 
state of chemical and mechanical knowledge, had reached the condition 
of “diminishing returns.” But at the same time in the United States, 
the accession of vast bodies of laborers was accompanied with a 
steadily increasing remuneration of labor, and states and counties 
were to be seen bidding eagerly against each other for these industrial 
recruits. 

I would not impeach the scientific impartiality of those who first 
put forward in distinct form this theory of wages; but it may fairly 
be assumed that its progress towards general acceptance was not a 
little favored by the fact that it afforded a complete justification for 
the existing order of things respecting wages. If there was, in truth, 
a definite fund out of which wages were paid; if competition unerringly 


A SURVEY OF WAGE THEORY 


243 


distributed the whole of that sum; and if no more could be paid to the 
wages class, as a whole, without impairing capital and diminishing 
employment, and thus in the end injuring the laborers themselves, 
then surely it was an easy task to answer the complaints or remon¬ 
strances of the working classes, and to demonstrate the futility of 
trades-unions and strikes as means of increasing wages. If an indi¬ 
vidual workman complained for himself, he could be answered that 
it was wholly a matter between himself and his own class. If he 
received more, another must, on that account, receive less, or none at 
all. If a workman complained on account of his class, he could be 
told, in the language of Prof. Perry, that “there is no use in arguing 
against any one of the four fundamental rules of arithmetic. The 
question of wages is a question of division. It is complained that the 
quotient is too small. Well, then, how many ways are there to make 
a quotient larger ? Two ways. Enlarge your dividend, the divisor 
remaining the same, and the quotient will be larger; lessen your 
divisor, the dividend remaining the same, and the quotient will be 
larger.” 

A most comfortable doctrine surely, and one which made it a 
positive pleasure to conduct a quarterly review in times when the 
laboring classes were discontented or mutinous. If the workman 
would not give up when told to enlarge his dividend, he was struck 
dumb on being informed that his only alternative was to lessen his 
divisor. The divisor aforesaid being flesh and blood, with certain 
attachments to home and life, and with a variety of inconvenient 
affections, was not to be lessened so easily. If the workman turned 
him from words to blows, and went out “on strike” with a view 
to better his conditions, it was regarded as the act of an irrational 
animal whose instincts, unfortunately, were not politico-economical. 

It is argued, capital must furnish the measure of wages. On the 
contrary, I hold that wages are, in a philosophical view of the subject, 
paid out of the product of present industry, and hence that production 
furnishes the true measure of wages. The employer purchases labor 
with a view to the product of the labor; and the kind and amount 
of that product determine what wages he can afford to pay. He must, 
in the long run, pay less than that product, less by a sum which is to 
constitute his own profits. If that product is to be greater, he can 
afford to pay more; if it is to be smaller, he must, for his own interest, 
pay less. It is, then, for the sake of future production that the 
laborers are employed, not at all because the employer has possession 


244 


THE WORKER IN MODERN ECONOMIC SOCIETY 


of a fund which he must disburse; and it is the value of the product, 
such as it is likely to prove, which determines the amount of the 
wages that can be paid, not at all the amount of wealth which the 
employer has in possession or can command. Thus it is production, 
not capital, which furnishes the motive for employment and the 
measure of wages. 

While wages must be regarded as paid out of the product of current 
industry, wages are, to a very considerable degree, in all communities, 
advanced out of capital, and this from the very necessity of the case; 
while in those countries which have accumulated large stores of wealth, 
wages are, in fact, very generally, if not universally, so advanced, 
equally for the convenience of the employers and of the employed. 
Yet even where the entire amount of the weekly or monthly pay-roll 
is taken out of a store of wealth previously gathered and husbanded, 
it is not capital out of which wages are borrowed, but production out 
of which they are finally paid, to which we must look to find their 
true measure. 

3. THE INFLUENCE OF THE OLDER THEORIES 1 ' 

Down to within the last thirty years it would have been taken 
for granted by every educated man, that Trade Unionism, as a means 
of bettering the condition of the workman, was “ against Political 
Economy.” This impression was derived not so much from any 
explicit declaration of the economists, as from the general view of 
wages which enlightened public opinion had accepted from them. 
The theory of the wage-fund, in conjunction with closely related 
theories of the accumulation of capital and the increase of population, 
seemed definitely to contradict the fundamental assumptions on which 
Trade Unionism depended. If Political Economy was understood 
to demonstrate it was plainly impossible, in any given state of capital 
and population, to bring about any genuine and permanent rise of 
wages, otherwise than in the slow course of generations, it was clearly 
not worth while troubling about the pretensions of workmen ignorant 
of economic science. Accordingly, for the first three quarters of the 
century we find, beyond the accustomed denunciation of outrages 
and strikes, practically nothing but a general and undiscriminating 
hostility to Trade Unionism in the abstract, couched in the language 
of theoretical economics. And although the theory, with all its 

1 Adapted with permission from Sidney and Beatrice Webb, Industrial Democ¬ 
racy , pp. 603-16. (Longmans, Green & Co., 1902.) 


A SURVEY OF WAGE THEORY 


245 


corollaries, has now been abandoned by economic authority, it still 
lingers in the public mind, and lies at the root of most of the current 
middle-class objections to Trade Unionism. 

The theory went much further than the mere negativing of 
strikes and combinations. It left no room for any elevation of the 
wage-earners even if the improvement justified itself by an increase 
in productive capacity. If one section of the wage-earners succeeded, 
by peaceful negotiation or law, in so bettering their own conditions 
of employment as positively to increase their productive efficiency, 
this would still bring no greater reward to the class as a whole. 
Though the increase in the cost of their labor might soon be made up 
to their employers by its greater product, yet this increased drain 
on the wage-fund must automatically have depressed the condition, 
and so lowered the efficiency of other sections, with the result that, 
though the inequality between the sections would have increased, 
the aggregate efficiency of the wage-earners as a whole would not 
have risen. Thus every factory act, which increased the immediate 
cost of woman or child labor, had to be paid for by a contemporaneous 
decrease in somebody’s wages; and every time a new expense for 
sanitation or precautions against accidents was imposed on the capi¬ 
talists, some of the wage-earners had automatically to suffer a dimi¬ 
nution of income. 

And when the Trade Unionists turned from the question of wages 
to-day, to the possibility of raising them in the following year, middle- 
class opinion had a no less conclusive answer to their claim. The 
future wage-fund that would be applicable for the payment of laborers 
in the ensuing year was, of course, necessarily limited by the available 
possessions of the community. But within that limit its amount 
depended on the will of the owners. They might, if they chose, 
consume any part of it for their own enjoyment, or they might be 
tempted to abstain from this consumption, and employ a larger or 
smaller proportion of their total possessions in productive industry. 
Ricardo had incidentally observed that the “motive for accumulation 
will diminish with every diminution of profit,” and it was assumed 
without hesitation that, whatever might be the various motives for 
saving, these motives would be stimulated or depressed according to 
the rate of interest which might be expected to be gained from the 
capital so invested. “ The higher the rate of profit in any community, 
the greater will be the proportion of the annual savings which is added 
to capital, and the greater will be the inducement to save.” It thus 


246 THE WORKER IN MODERN ECONOMIC SOCIETY 

1 

followed that the rate at which capital, and therefore the wage-fund, 
would be increased would vary according to profit, rising when the 
rate of profit rose, and falling when the rate of profit fell. “The 
greater the proportion of wages to profits the smaller the tendency to 
national accumulation.” 

Any rise of wages could, therefore, only be temporary, and must 
quickly counteract itself, for “an increase in wages reduces the profits, 
and reduces the inducement to save and extend business, and this 
again tends to a reduction of wages.” Cairnes, in an unguarded 
moment, went even further. “Profits,” he said, “are already at or 
within a hand’s breadth of the minimum .... below which, if the 
return on capital fall, accumulation, at least for the purpose of invest¬ 
ment, will cease for want of adequate inducement.” This automatic 
check on the wage-earners’ pretensions applies, it is clear, to more than 
the money wages. If by means of a Factory Act they had secured for 
the future shorter hours or better sanitation, this prospect of a reduc¬ 
tion of profits would instantly limit the capitalists’ desire to accumu¬ 
late, and would induce them as a class to spend more of their incomes 
on personal enjoyment. “There is only a certain produce,” wrote 
one widely read critic of Trade Unionism, “to be divided between 
capitalist and laborer. If more be given to the laborer than nature 
awards, a smaller amount will remain for the capitalist; the spirit of 
accumulation will be checked; less will be devoted to productive 
purposes; the wage-fund will dwindle, and the wage of the laborer 
will inevitably fall. For a time, indeed, a natural influence may be 
dammed back; but only to act, ultimately, with accumulated force. 
In the long run, God’s laws will overwhelm all human obstructions.” 

But enlightened public opinion had yet another argument to 
adduce, one which cut at the root, not of Trade Unionism only, but 
of all genuine improvement of the condition of the present generation 
of laborers, even if the capitalists actually desired to share their own 
profits with them. This was the celebrated “principle of population.” 
Malthus had proved that human fecundity was, as a matter of fact, far 
in excess of the actual increase of population, and that the numbers of 
mankind were kept down by the positive checks of vice and misery, 
notably by the privations and hardships suffered by the poor. It was 
the part of wisdom to substitute, for these positive checks, that 
prudential restraint which delayed marriage or forewent parentage, 
and the only hope for the laborers lay in a great extension of this 
prudential restraint, so that the ratio of capital to wage-earners might 
increase. This hope was at best a faint one, because the prudential 


A SURVEY OF WAGE THEORY 


247 


4 

restraint would have to extend to the whole wage-earning class, and 
would have to be maintained with ever-increasing rigor, as the resulting 
fall in the rate of profit slackened the rate of accumulation. And 
whatever degree of prudence might animate the wage-earning class 
at any particular time, it was taken for granted that the rate of 
increase must habitually rise when wages increased, and fall when 
wages were reduced. “Thus, if combination were for a time to raise 
wages, the growth of the wage-fund would be unnaturally retarded, 
whilst a fictitious stimulus would be given to population by the 
momentary enrichment of the laboring class. A diminished demand 
for labor would coincide with an increased supply. The laborer’s 
wages would be forced down to starvation-point; and his last state 
would be worse than his first.” The ratio of population to capital 
was, indeed, effectively defended on both sides from any but transitory 
alteration. If capital fell behind population, wages fell, but this 
very fall automatically brought about a quickening of accumulation 
and a slackening of the increase of population. If population fell be¬ 
hind capital, wages rose, but this very rise caused a check to accumu¬ 
lation and a stimulus to the inci^ase of population. 

With so complete a demonstration of the impossibility of “arti¬ 
ficially” raising wages, it is not suprising that public opinion, from 
1825 down to about 1875, condemned impartially all the methods and 
all the regulations of Trade Unionism. To the ordinary middle-class 
man it seemed logically indisputable that the way of the Trade 
Unionists was blocked in all directions. “The margin for the possible 
improvement of [the wage-earners’] lot,” emphatically declared 
Cairnes in 1874, “is confined within narrow barriers which cannot 
be passed, and the problem of their elevation is hopeless. As a body 
they will not rise at all. A few, more energetic or more fortunate 
than the rest, will from time to time escape, as they do now, from the 
ranks of their fellows to the higher walks of industrial life, but the 
great majority will remain substantially where they are. The remuner¬ 
ation of labor as such , skilled or unskilled , can never rise much above its 
present level.” 

4. THE RESIDUAL CLAIMANT THEORY (WALKER, 1887) 1 

In the theory of distribution here proposed, wages equal the 
product of industry minus the three parts already determined in their 
nature and amount. In this view, the laboring class receive all they 

1 Adapted with permission from Francis A. Walker, Political Economy, pp. 248- 
54. (Henry Holt & Co., 1887.) 


248 


THE WORKER IN MODERN ECONOMIC SOCIETY 


help to produce, subject to deduction on the three several accounts 
mentioned. 

First, rent is to be deducted. On the lowest grade of lands there 
is no rent. On the more productive soils rent, at its economic maxi¬ 
mum, equals the excess of produce after the cost of cultivating the 
no-rent soils has been paid. This rent does not affect the price of 
agricultural produce, and does not come out of the remuneration of the 
agricultural laborer. 

We thus see that the first deduction to be made from the product 
of industry is of a perfectly definite nature, and that, on the assumption 
of active competition on both sides, the amount of that reduction is 
susceptible of arithmetical computation. Rent must come out before 
the question of wages is considered. The laborer cannot get it, or 
any part of it, by any economic means. It must go to the land-owner, 
unless it be confiscated by the State, or ravished away by violence. 

Secondly, from the product of industry must be deducted a 
remuneration for the use of capital. That remuneration must be high 
enough to induce those who have produced wealth to save it and 
store it up, in the place of consuming it immediately for the gratifica¬ 
tion of personal appetites or tastes. This may imply, in one state of 
society, an annual rate of interest of 8 per cent; in another, of 5; 
in another, of 6. 

The third and last deduction to be made from the product of 
industry before the laborer becomes entitled thereto, is what we have 
called profits, the remuneration of the entrepreneur, the employer, 
the man of business, the captain of industry, who sets in motion the 
complicated machinery of modern production. These three shares 
being cut off the product of industry, the whole remaining body of 
wealth, daily or annually created, is the property of the laboring 
class; their wages, or the remuneration of their services. So far as, 
by their energy in work, their economy in the use of materials, or 
their care in dealing with the finished product, the value of that 
product is increased, that increase goes to them by purely natural 
laws, provided only competition be full and free. Every invention in 
mechanics, every discovery in the chemical art, no matter by whom 
made, inures directly and immediately to their benefit, except so far 
as a limited monopoly may be created by law, for the encouragement 
of invention and discovery. 

Unless by their own neglect of their own interests, or through 
inequitable laws, or social customs having the force of law, no other 
party can enter to make any claim on the product of industry, nor 


A SURVEY OF WAGE THEORY 


249 


can any one of the three parties already indicated carry away any¬ 
thing in excess of its normal share, as hereinbefore defined. 

I have spoken of the laborer as the residual claimant upon the 
product of industry. That view of wages being new, even the phrase 
in which I have embodied it has been excepted to. Since the first 
edition of this treatise was published, certain writers have declared 
that there is no more reason for applying the term, residual, to wages 
than for applying it to any other share of the product of industry; that 
each share, in turn, comprises all which the other shares do not include. 

Upon the theory of profits which has been expounded, the remuner¬ 
ation of labor, wages, is strictly the residual share of the product of 
industry, residual in this sense, that it is enhanced by every cause, 
whatever that may be, which increases the product of industry 
without giving to any one of the other three parties to production a 
claim to an increased remuneration, under the operation of the 
principles already stated; residual in the sense that, even if any one 
or all of the other parties to production become so engaged in any 
given increase of the product as to become entitled to an enhanced 
share in its distribution, their shares still remain subject to determina¬ 
tion by positive reasons, while wages receive the benefit of all that is 
left over after the other claimants are satisfied. 

Granting the correctness of the analysis we have offered, it is 
demonstrable that the product of industry may be increased without 
enhancing the share of all or of any of the other parties to distribution; 
and, even when the other shares are enhanced, it is possible and even 
probable that, on the assumption of perfect competition, the increase 
of product resulting from the introduction of any new force into 
industry will be greater than the sum of the increments by which rent, 
interest, and profits shall have been enhanced. If this be so, then the 
wages class will receive a benefit from any increase of the product of 
industry corresponding to that derived by the residuary legatee 
whenever the total value of the estate concerned is ascertained to 
have been, or from some unanticipated cause becomes, larger than was 
in contemplation of the testator when the amounts of the several 
specific bequests were determined upon. 

5. THE MARGINAL PRODUCTIVITY THEORY 1 

The problem of distribution of wealth is the problem of dividing 
the products of the industry of the community among the various 
classes. The claim of each class to a share of the wealth is usually 

1 Adapted with permission from Thomas N. Carver, Principles of Political 
Economy , pp. 365-99. (Ginn and Company, 1919.) 


25 ° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


based upon the claim that each has contributed something to its 
production. The market value of what each has to offer determines 
his share in the product. If the market value of labor is high, the 
laborer gets a large share; if it is low, he gets a small share. The 
reason for paying for an agent of production is that it helps to produce 
something which is desirable. Its value is derived from that of its 
product. It is therefore of the utmost importance that we find out, 
if such a thing is possible, how to determine the contribution of each 
factor. 

We have seen the necessity of a proper balance, not only among the 
factors of production but also among all the factors of national life. 
But some variation among the factors of production must always be 
allowed. A number of factors of production, when used in combina¬ 
tion, are not like the elements in a chemical reaction or the colors in 
a picture. These probably permit of no variation. The factors of 
production may always be combined in different proportions without 
destroying the result. Which is the more economical combination 
will depend upon the relative cost of land and labor. 

In a chemical combination the various elements have to be com¬ 
bined, apparently, in fixed proportions, without any variation what¬ 
ever. This is known as the law of definite proportions. But in 
order to induce a given chemical combination, different substances 
have sometimes to be mixed in considerable masses. This gives rise 
to another law, which is as definite and as well understood as the law 
of definite proportions. 

Take, for example, the manufacture of ether from alcohol and acids. 
With a given quantity of alcohol let us mix varying quantities of acid, 
which we shall represent on the line OX (Diagram I). The quantity of 
the product, ether, we shall represent on the line OF. When a 
quantity of acid represented by the line OC is put into the mixture, 
let uS assume that we get a quantity of ether represented by the 
rectangle OABC. Twice that quantity of acid with the same quantity 
of alcohol will increase the product, ether, but will not double it. 
That is, the product increases but does not increase in proportion to 
the acid. Let us suppose that a quantity of acid represented by the 
line OF produces, with the other ingredients, a quantity of ether 
represented by the rectangle ODEF. A third increment and a fourth 
would still result in some additions to the product, as long, perhaps, as 
any of the original quantity of alcohol was able to escape the mass 
action of the acid. Eventually the point would be reached when 
further increases of the acid would add nothing to the product. 


A SURVEY OF WAGE THEORY 


2 5* 


It will be observed, however, that the addition of the increment 
CF to the acid did not add the rectangle CIEF to the product. The 
addition to the product is the difference between the rectangle OABC 
and the rectangle ODEF. That difference is represented by the 
rectangle CGHF. 

This is technically known as the marginal product of the acid. 
This technical term does not mean, however, that even the product 
CGHF was produced by the acid alone; it merely means that what¬ 
ever value there is in the added product CGHF would be the outside 
limit of the value of the added ingredient CF. 

The marginal productivity of each factor in the combination is, 
it will be observed, the complement of that of the other factor. When 
the proportions are such that the marginal productivity of one is nil, 



B 

I 



E 

H 



Cr 



O C F 


Diagram I 

that of the other is ioo per cent of the average product; that is, the 
total product increases in exact proportions as this factor is increased. 
When the proportions are such that the marginal product of one factor 
is low, that of the other is high, the sum of the two marginal products 
are always equaling the total product. 

When there are more than two factors in the compound, the prob¬ 
lem becomes more complicated, but the principle is the same. In 
such a case it is better to treat each one separately, regarding all the 
others as a bunch, or cluster, and thus treating them as one. Marshall 
has suggested the word dose to designate a group of factors. Thus, 
if we were considering nitrogen, phosphorus, potassium, and all 
other factors in soil fertility, we could take all the factors except, say, 
nitrogen and treat them as constants. By varying the nitrogen in 
the compound, we get variations in the crop yields. [This same 
analysis may be applied to any of the factors of production.] 

It must be apparent that the relation between the variation in 
the quantity of any factor in the combination and the variation in the 
product must have a great deal to do with determining the value of 









252 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the factor. This method gives the key to all correct valuation. The 
term marginal productivity has been applied to the variation in the 
product which followed a minute variation in the quantity of any 
factor in the combination. Objection has occasionally been raised 
to the use of the word “product” in this sense. It is contended that 
even these increments of product are not in any sense the exclusive 
product of the forty-three pounds of nitrogen which were added in 
order to get that increment—that forty-three pounds of nitrogen, 
alone and unrelated to the other factors, would not produce even the 
small increments of wheat indicated in the third columns. No one, 
of course, claims that they would or could. It is not worth while to 
discuss this or that possible meaning of the word product or productivity. 
The essential thing to consider is, How much could a farmer afford to 
pay for a given quantity of nitrogen to be used in a given combina¬ 
tion ? How much more wheat could he grow by using more nitrogen, 
or how much less would he grow by using less ? It is in the answers 
to such questions that we must find the key to any clear understanding 
of the problem of the distribution of wealth, which is, as pointed out 
in the beginning of this chapter, the problem of the valuation of the 
factors of production. 

The price of labor, like the price of commodities, depends upon 
how much it is desired in comparison with other things. We must 
remember that the important question is not labor in general, nor how 
great would be the loss if all labor were wiped out of existence. The 
question is, How intense is the need for a given number of units of a 
given kind of labor, or how great would be the loss if that given 
number of units were subtracted from the total supply ? 

The function of a high price, in the economy of the nation, is to 
call into existence a larger supply of the thing for which it is offered. 
The function of a low price is to discourage the production and reduce 
the supply of the thing for which it is offered. In the case of labor, as 
in the case of commodities, the community may be sadly mistaken. 
It may fail to appreciate real merit, and it may greatly overrate certain 
qualities in either case. There is no going behind the returns in a 
verdict of this kind any more than in a popular election. 

We are sometimes told that most goods are socially produced. 
This is a rather impressionistic statement; it may do no harm, but it 
is liable to misinterpretation. It would be better to say that most 
goods are produced by the joint efforts of several persons. The total 
reward which can go to all of them cannot in the long run exceed 


A SURVEY OF WAGE THEORY 


253 


the total value of the finished product. This must be divided among 
all those who have participated in its production. 

The great social problem of today, so far as it relates to the dis¬ 
tribution of wealth, is the problem of distributing the price of the 
product among the contemporaneous workers. Not much headway 
can ever be made in the study of this problem unless we hold carefully 
in mind the law of variable proportions as previously explained. 
When it is suggested, for example, that each factor of production 
should be paid for in proportion to its contribution to the product, 
any student who does not understand the law of variable proportions 
is likely to say that there is no way of finding out what each factor 
contributes. He will say, for example, that it is like trying to find 
out how much of the welding is done by the anvil and how much by 
the hammer, or how much of the cutting by the upper and how much 
by the lower blade of the scissors. To use this comparison is to show 
that one does not understand the problem. If one blade of the scissors 
were a little longer than the other, it would not require any so-called 
metaphysical or theoretical reasoning to see that the scissors might 
be improved by lengthening the shorter blade. The workman who 
would lengthen the shorter blade would add somewhat more to the 
cutting power of the scissors than the workman who would lengthen 
the longer blade. 

It simplifies the problem somewhat to classify those who take part 
in the contemporaneous division of labor according to the functions 
which they are supposed to perform. It is customary to divide them 
into four main classes. The first class is made up of the laborers, who 
work either with their hands or with their heads, and receive their 
share in the form of wages or salaries (for the sake of simplicity, 
salaries are, in this chapter, included under wages); the second class 
is made up of the land-owners, who furnish the land and receive 
rent; the third class is made up oi the capitalists, who supply the 
capital and receive a reward in the form of interest; and the fourth 
class is made up of the independent business men, who undertake 
to assemble all the other factors, who take the chief risks of the enter¬ 
prise, and receive whatever is left over after all the others are paid, and 
call it profits. We are here concerned with the income which pays 
for the function of the laborer. Wages are the price which is paid 
to call forth the necessary quantity of productive labor. 

We may say in general that when one factor of production is over¬ 
supplied in proportion to the others which need to be combined with 


254 


THE WORKER IN MODERN ECONOMIC SOCIETY 


it, the question of getting more of it, or even of maintaining the 
existing supply, becomes unimportant. But when any factor is 
undersupplied in proportion to the others which have to be combined 
with it, the question of getting more of it, or of holding the existing 
supply, becomes very important. Accordingly, a high price will be 
offered for it. 

This principle applies not simply to land, labor, and capital, but 
to the different kinds of each. If there is a scarcity of skilled labor 
in proportion to the unskilled labor which has to be combined with it, 
it becomes very important to get more skilled labor, or at least to keep 
some of the existing supply from going elsewhere. In that case a high 
wage will be offered for skilled labor. Under the same conditions 
there is, of course, a large supply of unskilled labor in proportion to 
the skilled. Not much is likely to be paid, under such conditions, 
for unskilled labor. 

The next question is, What determines the relative supply of the 
various factors of production ? 

Let us consider, first, the causes of the difference of wages in 
different occupations. If, in order to get efficient production, it is 
found necessary to have a high degree of specialization, many different 
kinds of skill will be found in the same establishment, each kind con¬ 
tributing its share towards the production of the same product. Men 
possessing these different kinds of skill will be needed in slightly 
variable, but fairly definite proportions. In the production of cloth, 
for example, spinners and weavers will be needed in fairly definite 
proportions. If by any accident it could happen that for a period 
of time there were more spinners than were necessary to supply yarn 
for the weavers, the value of each spinner would be considerably 
reduced. Under these conditions, if they could exist, it would be 
literally true that a few less spinners would be little loss, provided 
the remaining spinners could still supply all the yarn the weavers 
could use. On the other hand, the labor of each weaver would be of 
considerable value. 

Since there would not be weavers enough to use all the yarns that 
could be produced, one less weaver would reduce the total production 
of cloth, and one more weaver would add to the total production, 
assuming that machinery and room were available. Under these 
conditions there would grow up in any free community a difference 
in wages in favor of the weavers and against the spinners. This 
would be called the law of supply and demand, but this law rests 


A SURVEY OF WAGE THEORY 


255 


back on certain fundamental advantages and disadvantages. The 
addition to the total output of cloth which would result from an 
increase in the number of weavers would really result from an equal 
increase in the number of spinners. This would be sufficient reason 
why a higher price should be offered for the labor of weavers than for 
that of spinners. In the absence of compulsion, that would be the 
only way of attracting more weavers and fewer spinners. 

Of course this condition would soon correct itself. If the wages of 
the weavers were allowed to go up and the wages of the spinners to 
go down, some of the spinners would have an excellent reason for 
changing their occupation. If they could not easily do so, the on¬ 
coming generation of laborers, who have to choose between the occupa¬ 
tion of weaver and that of spinner, would be attracted into the one 
where the wages were higher, and thus restore the equilibrium. 
There is, therefore, a genuine social utility to be achieved by the 
difference of wages which would grow up under the law of supply and 
demand. This will be found to be the fundamental reason why 
wages are as a matter of fact higher in some occupations than in 
others. Where the ordinary processes of bargaining are not inter¬ 
fered with, wages tend to be high in those occupations where more 
men are needed, and needed badly, and low in those occupations where 
more men are not needed, or not needed badly. The function of these 
differences of wages is to restore the equilibrium between different 
occupations. 

The discussion may be summarized as follows: 

1. The wages of any person will depend upon how much his labor 
is desired. The wages of any class will depend upon how important 
it is thought to be that there should be more laborers of that class, 
or that there should not be any less. High wages indicate a strong 
desire and low wages indicate a weak desire to have more of a certain 
kind of work done. 

2. Different kinds of labor usually have to be combined in fairly 
definite but somewhat variable proportions. If there happens to 
be more of a certain kind than will combine satisfactorily with the 
existing supply of the other necessary kinds, the oversupplied kind will 
not be strongly desired. There will be no great need for more of it, 
and therefore no strong reason for paying high wages. The kind 
of labor, however, which is undersupplied will be much more needed. 
There will be a strong reason for desiring more of it, and the only way, 
in a free society, to get more of it is to offer high wages. 


256 


THE WORKER IN MODERN ECONOMIC SOCIETY 


3. Labor which requires a kind of skill that is difficult to acquire 
will usually be scarce, relatively to the need for it. Wages must be 
high enough to induce men to make the necessary effort in order to 
fit themselves for the work. 

4. Unskilled labor is usually abundant, being limited only by the 
disinclination to work and the standard of living or the cost of bringing 
up children. Where the cost is high, or the unwillingness great, 
wages must be high enough to induce men to marry and bring up 
children. When the cost is low and there is very little unwillingness 
to overcome, wages may be low because men will bring up children 
on very low wages and thus keep the supply of labor intact. 


6. SOME ASSUMPTIONS OF THE PRODUCTIVITY 

THEORY 1 


\ 

The productivity theory seems to rely too much on the effectiveness 
of competition. It assumes too much in assuming, as it does, that 
employers will pay what they can pay. They can pay the worker 
the value of what the worker contributes to production; they need 
not do so unless the competition among employers for labor is at least 
as strong as the competition among workers for employment. Now 
although there are usually employers wanting labor as well as workers 
wanting employment, there are usually more workers wanting employ¬ 
ment than workers wanted by employers. The exponents of the 
theory argue that the competition among employers must be the 
keener for three reasons: they have buildings and plant which earn 
them nothing if they cannot get labor; they have a “connection” in 
their market which they run the risk of losing by any stoppage; and 
they are always anxious to increase their output in order to avail them¬ 
selves of the decreased cost of production which is usually possible with 
a larger output; to these may be added the even more important consid¬ 
eration that the employer can make profits by successful anticipation of 
the needs of the consumer as well as by capable organizing work, with¬ 
out paying the laborer any less than the discounted value of his product. 
Against these considerations must be set the fact that the laborer 
risks more than the employer if they cannot come to terms; the 
employer risks loss of profits, the laborer risks starvation and the 
starvation of his wife and children, or alternatively, the degradation 
of the Poor House; if the employer risks having his plant standing 


1 Adapted with permission from Henry Clay, Economics for the General Reader , 
pp. 298-301. (The Macmillan Co.,1919.) 


A SURVEY OF WAGE THEORY 


257 


idle, the laborer risks having to break up his home, leave the town he is 
attached to, and seek employment in a new district. On both sides 
the risk of loss is so great that the parties usually come to terms with 
surprisingly few disputes; and the connection between any individual 
employer and any individual workman is in most trades one which 
can be broken only with loss to both, since a workman who has been 
some time in a shop is worth more to his employer than a new man 
would be or than he would be in another shop. 

Although the employer can make profits while giving full produc¬ 
tivity value for labor, it is a characteristic of business that a man takes 
what he can get, and an employer would be merely unbusinesslike 
who did not take advantage of the laborer’s weakness as a bargainer; 
fortunately some business men are unbusinesslike. Moreover the 
“productivity” of the laborer depends, more than on anything else, 
on the employer’s powers of organization. Slack organization on 
the part of the employers in a district will make the labor of the 
district less productive than labor of the same skill and the same 
intensity in districts where employers do their organizing work 
better. To say in such a case that wages are low because the produc¬ 
tivity of labor is low may be true, but it is to suggest that the workman 
is to blame when really the employer is at fault. Where this is the 
case, the workers, by insisting on higher wages, may increase their 
productivity without in the least increasing their labors; for the 
productivity of a given amount of labor will be increased when the 
employer abolishes waste, removes disorganization, and supplies his 
workers with the best appliances. 

The word “productivity” requires examination. The word usually 
means “output” measured by the yard, ton, or bushel. But when 
we say that wages depend on the productivity of labor, productivity 
is not equivalent to “output”; it means merely “productivity of 
market-value,” which may correspond with output, but also may not. 
If a king dies suddenly there is a .sudden increase in the value of 
mourning goods; the labor, of which these goods are a product, has 
become more “productive,” although the skill and exertions of the 
laborer, and the number of yards of cloth he turns out, are precisely 
the same as they were before. This distinction is often forgotten, 
and the productivity theory of distribution comes to be used (uncon¬ 
sciously perhaps) as a justification of the present unequal distribution 
of the national income. Each, it seems to show, gets what he produces; 
what could be fairer ? It is forgotten that the market-value by which 
this productivity is measured bears no constant relation to social 


258 THE WORKER IN MODERN ECONOMIC SOCIETY 

service. The theory is true (if at all) only if we give “productivity” 
its second meaning, “productivity of value,” the theory justifies the 
present distribution (if at all) only if it has its first meaning, “output.” 
In the only sense of the word “productivity” in which the productivity 
theory of distribution is true, the man who receives $25 a week for 
looking after Pekinese puppies for an American heiress is four times 
as “productive” as the farm-labourer receiving $25 a month; the 
services of the two to society do not bear the same relation. 

To avoid the ambiguity of the word “productivity,” the commoner 
word “efficiency” is sometimes substituted, and wages are said to 
depend on efficiency. But the new word is not free from ambiguity 
itself; efficiency will help to explain differences in wages in the same 
occupation, since such differences will be reflected in output, but it 
will not explain differences in wages in different occupations. We 
have no common measure of efficiency in different occupations except 
the wages paid, so that to use efficiency to explain the wages is to 
beg the question. The low-wage worker may be just as efficient 
at his work as the high-wage worker at his, and the low-wage work may 
be equally indispensable to society; while it may be true that the low- 
wage worker could not do the high-wage worker’s work, it may be 
equally true that the high-wage worker could not do the low-wage 
work; a joiner could not (without a fresh industrial training) tend a 
spinning mule, but neither could a spinner (without a fresh industrial 
training) frame a roof. Yet another principle of wages has been 
offered in “Economic Worth.” Economic Worth, however, turns 
out on examination to be merely a misleading synonym for produc¬ 
tivity of market value—misleading because the plain man always 
associates with the word “worth” the idea of moral desert, so that 
the statement that distribution is in accordance with “economic 
worth” inevitably carries with it the suggestion that the poor are poor 
because they are bad and the rich are rich because they are good. 

* 

B. Standards of Wage Adjustment 

7. THE QUESTION OF EQUITY IN ECONOMIC 

REMUNERATION 1 

There is one important cause which we find at the bottom of almost 
every dispute, however inflamed by the “trivial” causes, and this is 
the profound belief, which seems implanted by Nature in the mind of 

1 Adapted with permission from Edwin Cannan, The Economic Outlook, 1912, 
pp. 299-312. (Reissue by P. S. King and Son, London.) 


A SURVEY OF WAGE THEORY 


259 


almost everyone, that his income “ought” to be, that is to say, 
would be, if justice prevailed, somewhat bigger—about 25 per cent, 
is the average—than it actually is. It is quite a mistake to suppose 
that the belief is confined to persons in receipt of wages and salaries: 
It is held just as strongly by those whose income is obtained by way 
of business profits or by way of interest or rent from investments and 
property—and that, too, whether the investments and property have 
been the result of the saving of the owner or have been given or 
bequeathed to him. 

The universality of the belief ought to awaken doubts about its 
soundness. It is clear that there is not enough at present to allow 
of the distribution of 25 per cent or even 1 per cent more than people 
actually get. Somebody or other gets every particle that is produced. 
Everyone, then, cannot be right in thinking that justice demands 
that his income should be immediately raised about 25 per cent. 
This will be generally admitted: the trouble is that each person 
thinks he and his own class are right and that it is the other classes who 
are wrong, in the belief that their incomes “ought” to be about 25 
per cent higher than they are. It seems worth while to inquire what 
our ideas of justice in the distribution of what is produced really 
amount to. 

“It may be true,” someone may say, “that with regard to 
property, our current ideas of justice do not amount to more than a 
certain amount of reverence for custom, but surely you must admit 
that we have much more positive beliefs about the just remuneration 
of labour.” One tolerably clear idea we certainly have—the idea that 
when two persons do the same kind, the same quantity, and the same 
quality of work in the same place and at the same time they “ought” 
to receive the same remuneration. Though all these conditions are 
scarcely ever exactly fulfilled, they are often approximately fulfilled, 
so that this rule of justice plays a large part in many wage discussions. 
But the greater inequalities of earnings are between different kinds 
of work, and then the rule is of no use whatever. 

There appears to be a very general acquiescence in the general 
features of the scale in which different kinds of labour are graded. We 
find people generally demanding a small increase in remuneration for 
their own class and imagining they would be perfectly contented if 
they got it. They do not think that justice demands that they should 
be raised to a very much higher level in the general scale: scavengers, 
for example, may ask for a rise from 24s. to 30 s. a week, and may 



26 o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


even think they “ought” to have 35s., but they never think of claiming 
that they “ought” to be paid as much as is earned by the average 
medical practitioner. Still less do they see anything much wrong 
with the scale so far as it does not affect themselves. We should 
all like to touch up the scale here and there, but none of us seem to 
want to alter it fundamentally. If, then, we allege that there is some 
“just” remuneration of labour which labour “ought” to get, we are 
bound to find some defense of the existing scale of remuneration on 
grounds of justice. 

No such defense, however, can be found, any more than in the 
case of the inequalities of income derived from inherited property. 
Several rather stupid suggestions are made by the man in the street. 
One is that “skill” is a thing which “ought” to be paid for, so that 
it is “just” that the professions and skilled trades should be higher 
paid than the other occupations. But why the skill which is possessed 
by an average member of one of the professions or skilled trades 
“ought” to yield more or less than the skill possessed by the average 
member of another of these occupations or more than that possessed 
by the average member of a so-called “unskilled” occupation, nobody 
seems to know. There is no way of comparing the skill required in 
different occupations. If we could compare it, we should still be met 
with the fact that the skill is either natural or acquired: if it is natural, 
we know of no reason for supposing that the happy possessor ought 
to be paid higher, and if it is acquired, it was probably acquired 
chiefly in consequence of opportunities created by persons other than 
the possessor himself. 

What the existing scale of remuneration for different kinds of 
labour does is to give each kind its market value, and this value is 
obviously settled by a great many influences, among which justice 
plays no part at all. Attempts to tinker it here and there on the 
ground that particular small features in it are unjust, and that justice 
would be done if this or that class had 10 or 20 per cent more than at 
present are really childish. 

While a clear appreciation of this fact should take away a good 
deal of the bitterness which at present accompanies the necessary 
haggling between employers and employed, it certainly does not follow 
from it that no class of men or women should ask for more than they 
are getting, nor that disinterested persons should not be glad when 
some of the demands made are successful. 

The first point surely requires little elaboration. The whole of 
our present economic organisation is really dependent on people 


A SURVEY OF WAGE THEORY 


261 


asking for as much as they can get, and the world would be thrown 
into a state of unimaginable confusion if they suddenly ceased to do 
so and began deliberately to let their property for less and to work 
for less than they could get. Mr. Wells himself could not make much 
of such a hypothesis. No one doubts that an individual is acting in 
the public interest as well as in his own when he sells his services to 
the highest bidder. 

As to the second point, many persons seem to imagine that if 
there is no rule of justice in the remuneration of different kinds of 
labour, it is impossible for them to have sympathies in regard to any 
change in wages which does not affect them personally. Like Queen 
Victoria, they want to be told what is right, not what is expedient. 
But there are surely many things which we properly welcome, and 
many which we properly deplore, although no question of justice or 
righteousness is concerned. We ought obviously to rejoice, as a rule, 
at the occurrence of any event which increases the material welfare 
of any class without reducing that of other classes, and, of course, 
it often happens that a rise of earnings is merely the result of some 
change which causes the workers to produce a larger quantity of 
product than before without reducing the value of the unit of quantity 
sufficiently to prevent them profiting by the increase. But it is 
perhaps not quite so clear what we ought to welcome and what we 
ought to deplore when a rise of earnings in some particular occupation 
is not the result of increased productiveness, but is distinctly at the 
expense of some other class or classes of the community. 

The popular belief—not, I think, only among the weekly wage- 
earners but among all classes—is that rises of wages in particular 
occupations are always at the expense of the owners of property, 
vaguely called “the capitalist” in popular oratory. But this belief 
will not bear a moment’s examination. The particular “capitalists” 
from whom the wages of particular kinds of labour come in the first 
instance are usually merely middlemen between the workers and the 
consumers: if the price paid by the capitalists to the workers increases, 
the capitalists will be able at once or after no long interval to charge 
the increase to the consumers. Wages are not ultimately paid by the 
capitalist, but by the persons who want and are able to pay for the 
product of the particular labour in question. Of course, there are 
a few products which are only bought by rich people, and rich people 
are mostly owners of property. But this is not the ordinary case. 
In spite of the enormous wealth of the very rich, the greater part 
of the demand for products in general comes from the moderately 


262 


THE WORKER IN MODERN ECONOMIC SOCIETY 


well-to-do and the poor, and a very large proportion comes from the 
“working classes” in the ordinary sense of that term. Consequently 
it is inevitable that when particular workers get more without produ¬ 
cing more, the burden should fall largely, and sometimes chiefly, upon 
wage-earners doing other kinds of work. 

It would be absurd, then, even for one whose sympathies were 
altogether on the side of the workers against the owners of property 
to sympathise indiscriminately and equally with every demand for 
increased wages. Wage questions are constantly questions about the 
relative remuneration of different kinds of labour, and before we can 
tell what we ought to welcome and what to deplore we must have 
some notion of the scale of relative remuneration which we approve. 

It follows that the changes in the remuneration of labour which we 
should welcome because they are economical are those which, without 
injuriously affecting production, reduce inequality of wealth. Of 
course, it may sometimes happen that an increase of earnings which are 
already high may do this because the particular demand comes entirely 
from the rich: a rise in the remuneration of butlers and ladies’ maids, 
for example, would pinch nobody but the wealthy, while benefiting 
a class with only moderate means. But such cases do not amount 
to much. The really potent changes of the character desired will be 
those which raise the remuneration of the worst paid occupations. 

It will perhaps be said that every reasonable person knows that 
a rise in the lowest wage is a good thing, and that every well-disposed 
person welcomes it accordingly. But do they do so without reserva¬ 
tion “if the rise is not at the expense of some other class?” Some 
such reservation is implied in the phrase “the economy of high wages” 
as the name of the doctrine which teaches not that high wages are a 
good in themselves, but that they enable and induce the wage-earner 
to produce so much more than the ultimate payers of the wages gain. 
If what I have said were really accepted, this reservation would not 
be made. 

8 . THE WAR-TIME SEARCH FOR “STANDARDS” 1 

In the widespread attempts to fix wages (during the war), the 
truism was borne home to many adjusters that in the last analysis 
there are no standards by which scientifically to determine the 
amounts of compensation to which different members of the corn- 

adapted with permission from A. M. Bing, War-Time Strikes and Their 
Adjustment , pp. 188-207. (E. P. Dutton & Co., 1921.) 


A SURVEY OF WAGE THEORY 


263 


munity are by right entitled. Furthermore, not only are scientific 
standards for wage determination completely lacking, but the problems 
which the wage adjuster faces, especially during a time of emergency 
such as war, can seldom be solved in a purely judicial manner. This, 
because his primary task during war-time is less to do absolute 
justice than to keep production going. He is therefore forced to take 
into account—consciously or unconsciously—all of the surrounding 
circumstances—the temper, character and power of each side. 

A study of the work of the adjustment boards will show the follow¬ 
ing considerations to have been the most potent in influencing their 
decisions: (a) a minimum living wage; ( b ) increases in the cost of 
living; ( c ) standardization, both within a given industry and over a 
given territory; (d) increase in productive efficiency; (e) the effect 
of overtime in increasing weekly earnings. Yet in spite of the fact 
that these principles were the determining ones in the work of practi¬ 
cally all of the boards, nevertheless there was no common agreement 
as to the manner in which they should be applied or the emphasis 
that should be placed upon one rather than another. 

The minimum wage— The one principle which stands out most 
prominently and on which, in theory at least, there was general 
agreement (though much difference in emphasis and practice) was 
the desirability of the payment to all workers of at least a minimum 
living wage. 

One of the first statements of this principle is contained in General 
Order Number 13 of the Ordnance Department, to wit: “It is neces¬ 
sary that minimum wage rates bear a constant relation to increases 
in the cost of living.” A much more definite statement was later 
enunciated in the principles of the National War Labor Board as 
follows: “The right of all workers, including common laborers, to a 

living wage is hereby declared.In fixing wages, minimum 

rates of pay shall be established which will insure the subsistence of 
the worker and his family in health and reasonable comfort.” 

Increases in the cost of living :—By far the most important question 
which was presented to every wage adjuster was the extent of the 
increase in the cost of living. It was generally felt by both employer 
and employee that although not necessarily the determining factor, 
yet the percentage by which living costs had increased had always 
to be given the fullest consideration before a wage award was made. 
And there were very few hearings at which evidence was not offered 
on this question. It was soon realized by most boards that no decision 


264 


THE WORKER IN MODERN ECONOMIC SOCIETY 


could be regarded as permanent and after a while the principle was 
adopted of setting six months as the period for the duration of an 
award. At the expiration of this time the award was to be reopened 
if a change in conditions rendered it necessary. 

Standardization :—One of the most definitely marked economic 
phenomena of the war was the tendency manifested throughout all 
industry towards uniformity in wage rates. A leveling process was 
taking place, as a result of which wage differences, between skilled 
and unskilled, union and non-union labor and between the workers 
in one part of the community and another, became very much reduced 
as compared with what they had been before the war. This was 
the natural result of general industrial conditions as well as the more 
or less artificial result of the action of the Government boards. 

The natural processes making for standardization were acceler¬ 
ated and deepened by the more or less artificial action of the various 
wage adjustment agencies. Since production was the primary concern 
of the Government, efficiency demanded that men be prevented from 
shifting from one place or industry to another where such change was 
unnecessary, and that such transfers be facilitated where they were im¬ 
perative. Wage uniformity was needed to produce both of these results. 
It also tended to remove the dissatisfaction which men of a particular 
trade or locality would naturally have felt because of higher wages 
paid to others. A further consideration was the conclusion reached 
by all of the boards that one of the reasons which had always been 
given for wage differentials—the difference in the cost of living in 
different localities—was no longer applicable to any appreciable 
degree. There was therefore an almost universal tendency on the 
part of adjustment boards to apply uniform wage scales over wider 
and wider areas. Thus the Shipping Board, whose first awards were 
for single yards and then for districts, ended by setting up practically 
uniform rates for the entire country. 

Increase in productive efficiency .—Inasmuch as production was 
the paramount object of war-time wage adjustments we might have 
expected that the effect of any wage increases on the efficiency of the 
workers would have received most careful consideration. Except, 
however, in relation to the minimum wage, the principle of productive 
efficiency does not seem to have been given as much attention by the 
wage boards as were the other principles examined above. 

A reason for this fact may have been the difficulty of determining 
just what was the effect of a wage increase upon efficiency and produc- 


A SURVEY OF WAGE THEORY 


265 


tion. Another reason was the fact that the power of the men to enforce 
their demands made wage increases necessary irrespective of their 
effect upon the efficiency of the workers. 

Overtime. —In normal times overtime is not worked except in 
emergencies. But during the war it became in most industries a 
regular practice. As a result weekly earnings were increased by 
amounts varying from 40 to 100 or more per cent. It was psycho¬ 
logically impossible to ignore a factor which so potently influenced 
the actual earnings of the men. Consciously or unconsciously these 
large amounts of pay due to overtime were taken into consideration 
and wages were fixed at rates lower than would otherwise have been 
the case. 


9. THE IRRATIONAL NATURE OF WAGE 
DIFFERENTIALS 1 

The industrial world is full of wage differentials between workers; 
but many of them are of the most illogical character. These differen¬ 
tials are based on historical accidents, on the relative skill of different 
groups of men in gaining increases and on unessential peculiarities 
of place and practice. During the war, some of the great wage boards 
established uniform rates for men from the Atlantic to the Pacific and 
from the Great Lakes to the Gulf of Mexico (barring colored labor 
in certain parts of the south) and set up identical rates in all this 
area for skilled men in a great variety of trades. These awards wiped 
out a host of old differentials. Sometimes they fitted imperfectly 
and caused embarrassment. But on the whole they worked. Since 
the War, the reversion to the old principle of special wage fixing in 
each place has brought about a certain measure of diversity. But 
as long as the war-time idea of national standards was adhered to 
there was nothing inherently impractical about the system. National 
standards may be too high or too low or wrongly drawn up, but it 
has been demonstrated that if we want them they can be made to 
work. 

There are good human and industrial reasons for believing that 
under a truly fair and logical system of remuneration devoid of 
accidents, the pay, the worth, of most persons would be not far from 
uniform. When it comes to creative work, when it comes to very 
special peculiarities, persons differ enormously; so that one man 

1 Taken with permission from Horace B. Drury, “The Importance of Self- 
Help,” in Annals of the American Academy, pp. 73-74* (March, 1922.) 


266 


THE WORKER IN MODERN ECONOMIC SOCIETY 


might well be worth a thousand others. How many workmen would 
it take to fill the place of Newton or Lincoln, or, perhaps, of some of 
the real makers of modern industry ? But in proportion as industry 
becomes standardized on the basis of the best practice, in proportion 
as there is education, transference of skill, and the spread over great 
areas of each new thing that someone discovers, the great majority of 
people are put at work carrying out measures thought out by others. 
Real ingenuity becomes more valuable than ever; but nine-tenths and 
more of the actual work of the world becomes routine. Now at 
routine work people are potentially not so far from equal. There 
may be many occupations that not everyone could fill; but as long 
as there are many more people who could fill these occupations— 
and would be glad to do so—than there are such positions to be filled, 
such distinctive callings have no special value under our system and 
draw no more remuneration than the other work of the world. 

io. STANDARDS IN WAGE REVISION: THE 
“COST OF LIVING” AND THE WAGE 
CUTS OF 1920 - 21 1 

No one has yet found a principle of wage revision which is satis¬ 
factory for all time and for all places. And no one probably ever will. 
So for lack of acceptable principles, now workers and then employers 
cast about from occasion to occasion for convenient formulae which 
at the time seem best calculated to get them what they want. 
Throughout the history of wage negotiations in this country one wage 
“principle” after another has supplanted its predecessor because 
circumstances had in the meantime so changed that what was once 
potent seemed to have spent its strength. Accordingly, such pseudo¬ 
principles as maintenance of wage differentials, standard of living, 
cost of living, sliding scale, productive efficiency, each had its vogue, 
was discarded, and again revived, as it met or failed to meet the 
exigencies of particular situations. In view of these facts it is not 
surprising that in the period from 1915 to the present, “cost of 
living” should come into its own as the fundamental principle in wage 
adjustments—buttressed by all of the moral flavor which the word 
“principle” implies. For in the short time of four and one half 
years the cost of living in this country rose with such speed and 

1 Adapted with permission from Leo Wolman, “The Cost of Living and Wage 
Cuts,” New Republic (July 27, 1921), 62-64. Although this article is addressed to 
a particular case, the argument has general application. 


A SURVEY OF WAGE THEORY 


267 


directness that in June and July of 1920, it was probably no per cent 
above its level in 1914. What more natural, then, than that the 
workingmen of the United States should seize upon this condition 
as the most obvious, effective and most popular reason for demanding 
necessary increases in their money wages ? 

Now the cost of living has this peculiarity—it does not always 
move in the same direction. In the summer of 1920 it turned in its 
tracks and began that spectacular downward movement, so interesting 
to statisticians, which left it in April, 1921, somewhere about 18 per cent 
below its 1920 peak and possibly about 70 per cent above its level in 
1914. No sooner had it turned, however, than the shoe was on the 
other foot. The cost of living had now become the favorite principle 
of wage revision for the other party and it may be expected to remain 
so, until perhaps the time comes when it turns again. 

It has been frequently stated by those who have participated 
actively in the contemporary epidemic of wage reductions, that 
it is their purpose to maintain the purchasing power of the incomes 
of workingmen at the level reached somewhere in the past—1918, 
1917 or 1914. To accomplish this purpose, wages must be cut pari 
passu with each decline in the cost of living; otherwise the real 
incomes of the workers would rise and their standards improve. As 
if there existed in this country some generally accepted standard of 
living that workingmen should be permitted to approach but not to 
exceed! This, however, is precisely the point at issue in the great 
majority of wage disputes. The labor group contends that the stand¬ 
ard of life which its members have acquired is too low and it proceeds 
to raise it either by forcing wages up or by resisting wage cuts when 
prices are falling. In many industries, indeed, even if wages are 
chosen at their peak, it would be difficult to prove that they were 
excessive with reference to any “reasonable” individual or family 
budget. Where this is the case, the use of the cost of living index 
as a corrective of money wages is not legitimate unless some agreement 
has been reached between employer and workmen concerning the 
standard on which changes in purchasing power are to be measured. 
If $1,800 were agreed upon as an adequate wage for a married man 
with three children when the cost of living was 100 per cent above the 
pre-war level, then there might be some reason for reducing his wages 
to $1,575 when the cost of living had dropped to 75 per cent above that 
level. But if $1,800 is found to be inadequate for the job of keeping 
a family in health and cheerfulness, then revision downward for the 


268 


THE WORKER IN MODERN ECONOMIC SOCIETY 


same reasons has only relieved the industry of the necessity of support¬ 
ing its workers. 

Much of the confusion that in this connection surrounds discus¬ 
sions of the relations between cost of living and wages is probably 
due to the failure to recognize that many of the most striking increases 
in wages during the war and after the armistice were more apparent 
than real. Once we shift the discussions from percentage increases 
to absolute wages it is impossible not to see how it must get involved 
in misconceptions of a rather fundamental nature. For example: 
two women earn in 1914 $5 and $10 a week. Each gets a raise so that 
by 1920 both are earning $25 a week. The first woman has then 
received an increase of 400 per cent and the second of only 150 per 
cent. 

The example may seem extreme, but cases of it may be found 
throughout most of our wage statistics of the war period. It must be 
quite evident, then, that high percentage increases in wages are not an 
evidence of excessive wages at the close of the period of increases. 
They are often an evidence of gross underpayment at its beginning. 
It is a simple arithmetical truth that it is easier to erect large 
percentage increases on a small number than on a large one. 

In spite of all current talk about cost of living and standards of 
living, neither concept is, as a matter of fact, of prime importance in 
the present wave of wage reductions, which began last summer and 
which is still on.- The real occasion for wage reductions has been 
the business depression. In the course of a business depression it is 
considered good business policy to cut all prices, including wages. 
Out of this condition grew the demand for wage reductions. The 
assumptions underlying this demand were that prices must fall, poss¬ 
ibly to the pre-war level; that they could only be reduced if wages 
were cut; and more generally that it was somehow not quite right 
for labor to evade the liquidation in which most of the business com¬ 
munity was participating. 

Under normal conditions the liquidation of labor and wage reduc¬ 
tions would probably have been accomplished with great ease. But 
the trade union movement in this country had gathered considerable 
strength in the past five years and the demand for wage cuts met with 
considerable resistance. It became necessary, therefore, not only 
to convince labor of the justice and legitimacy of a proposed reduc¬ 
tion but also to build up a favorable public sentiment. For such 
purposes measures of changes in the cost of living served a useful 


A SURVEY OF WAGE THEORY 


269 


function, particularly in view of the fact that a not inconsiderable 
group of workmen had agreed during the rise in prices to adjust 
their wages with reference to index numbers of the cost of living. 

Nevertheless, revisions of wages on the basis of changes in the cost 
of living are at best makeshifts. They help tide over a difficult 
period, but they neither answer nor seek to answer fundamental 
questions. 

When the experience of this country with wage reductions has 
been finally studied, the reductions will in all likelihood be found to 
bear little relation to changes in the cost of living. Already some 
slight information on this matter is available. In one industry, for 
instance, wage increases for different firms ran all the way from 78.2 
per cent to 177.0 per cent, a range of almost 100 per cent. This 
industry is one in which the advertised reductions were generally 
uniform. If the country as a whole were canvassed the range of 
reduction would probably be just as large. The meaning of this 
seems to be that wage reductions as they are now made, are deter¬ 
mined, both with regard to occasion and extent, by the business man’s 
judgment regarding the requirements of business. For making 
judgments of this sort and for estimating the needs of business, 
measures of movement of the cost of living appear to be largely 
irrelevant. Where, under these conditions, the cost of living is 
invoked, more fundamental issues become hidden; and more pertinent 
matters—like the capacity of industry to pay, the duration of the 
period in which the reduced wages will be kept so, the relation of labor 
cost to total cost and hence prices, and the conditions essential to 
business revival—do not receive the consideration they deserve. 

PROBLEMS 

1. “The various historic wage theories and the assumptions underlying 
them have been simply reflections of the economic facts of the period 
in which they were framed.” Can you put concrete substance into 
this statement ? 

2. Try to work out the assumptions underlying each theory and determine 
to what extent they are true. 

3. It is sometimes said that there are three kinds of inequalities which 
wage theory must explain: differentials between wage levels in corre¬ 
sponding industries in different countries; between different industries 
in the same country; between individuals and groups in the same 
industry and country. List as many factors as you can in explanation 
of each. Do the classical theories relate to one type of difference 
more than to others ? 


270 


THE WORKER IN MODERN ECONOMIC SOCIETY 


4. “There is a misleading unreality about the orthodox classification of 
the factors of production as ‘land, labor and capital.’ It is more 
useful to think of production as being carried on by labor and manage¬ 
ment working with capital through organization.” Is there any reason 
why this should be a more useful approach ? 

5. Can you ascertain the specific productivity of a worker in a modern 
factory organization ? If so, how; if not, why not ? 

6. “The main difficulty in wage determination is the lack of common 
standards: the worker measures wages by one yard-stick, the employer 
by another.” Is this true? If you think it is, what standards does 
each use ? 

7. “Wages are determined by bargaining power, not by productivity.” 
Could you frame a “bargain” theory of wages? 

8. “It becomes more and more obvious that the working classes work 
for each other more than for the capitalists and landlords.” Is this 
true? Why or why not? Who surrenders what the worker gains? 
How find out ? 

9. What are the influences of “standards of living” on wages? Should 
the question read, “What are the influences of wages on standards of 
living” ? 

10. “Workers still tend to think in terms of the wages fund theory, although 
that theory has been exploded.” Have the assumptions of the wages 
fund theory ever any validity from the point of view of the worker ? 

11. “I am not sorry that the American worker does not save more.” Why 
or why not ? 

12. “A change in standards of consumption would make a profound change 
in the differences in wages as between different industries.” How? 
Do you agree ? 

13. Are there “non-competing groups” in the labor market? How could 
they be made up? Would the machine tend to break them up? 
Would any other influences in modern life? Has the question any 
significance ? 

14. “We have no measure except market value of the productivity of 
different kinds of labor: to say that each tends to get the value of his 
contribution to the joint product of industry means no more than that 
the contribution of each tends to be valued at what he gets.” Is 
it true that the marginal productivity theory simply argues in a 
circle ? 

15. “It is clear that there is not enough at present to allow of the distribu¬ 
tion of 25 per cent or even 1 per cent more than people actually get.” 
“There is a fallacy in the form of this statement since a change in 
distribution might result in increased production.” What do you 
think of the question ? 


A SURVEY OF WAGE THEORY 


271 


16. Is it true that everyone “thinks his income ought to be about 25 per 
cent more than it actually is” ? 

17. Suppose you were an industrial arbiter. What theory or principles 
would you use in adjusting a wage dispute ? 

18. “The task of the wage adjuster during war-time is less to do absolute 
justice than to keep production going.” Do you agree with the implica¬ 
tions of this statement as to the task of the peace-time adjuster? 

19. Are there any determinable limits to the amount of wages which can 
be paid in a given industry ? a given plant ? What are they ? 

20. What would you regard as the elements of a “scientific” approach to 
the wage question ? 

21. Evaluate each of the principles or standards of wage adjustment 
suggested in the second part of this section. 

REFERENCES FOR FURTHER READING 

Annals of the American Academy of Political and Social Science (March, 
1922) 

Askwith, Lord, Industrial Problems and Disputes 
Bing, A. M., War-time Strikes and Their Adjustment 
Clay, Henry, Economics for the General Reader 

Commons, J. R. (Ed.), Trade Unionism and Labor Problems (.Second Series ) 

Davidson, John, The Bargain Theory of Wages 

Feis, Herbert, The Settlement of Wage Disputes 

Furness, H. S. (Ed.), The War and the WagefEarner 

Graham, William, The Wages of Labor 

Hamilton, W. H., and May Stacy, The Control of Wages 

Hobhouse, L. T., The Elements of Social Justice 

-, The Labour Movement 

Hoxie, R. F., Trade Unionism in the United States 

Marshall, Alfred, Principles of Economics 

Stockett, J. N., The Arbitral Determination of Railway Wages 

Taussig, F. W., Principles of Economics 

-, Wages and Capital 

Webb, Sidney and Beatrice, Industrial Democracy 




CHAPTER IX 


STANDARDS OF LIVING: THE DISTRIBUTION OF 
WEALTH AND INCOME: WAGES AND EARNINGS 

A. Standards of Living 

i. A DESCRIPTION OF STANDARDS OF LIVING 1 

a) DEFINITION OF A STANDARD OF LIVING 

Broadly speaking, a standard of living for any group of people 
is such a sum of accustomed goods and services as they consider 
absolutely essential to their maintenance. In a very poor com¬ 
munity this may mean the barest elements of physical existence. 
(The Chinese coolie living on a bowl of rice and wearing one garment 
the year around is the classic example of this.) In a well-to-do group 
it may include many cultural wants. For practical purposes in any 
given group a standard may be considered basic when with less than 
that amount the group would cease to be self-supporting, would show 
definite signs of undernourishment or other stigmata of degeneracy, 
or would cease to have enough children to perpetuate itself. Viewed 
in this sense, it might be regarded as the cost of producing labor. 

It is patent that ideas differ as to what one’s standard of living 
should be. We are all inclined to believe that we should have more 
things, and save for a fortunate few, our incomes never seem to be 
enough to satisfy our “needs.” On the other hand, it is very easy for 
us to pass judgment upon others and declare that they should not 
spend “too much” and that they do not “need” as many things as 
they seem to want. The problem as to why people want certain 
things and what determines how many they want is too complicated 
to touch upon here but the answer would go far to explain wage levels, 
industrial efficiency, and many other matters. 

The difference between a standard of living and the cost of living 
should now be plain. The money cost of any given standard of living, 
just as of any simple commodity of any assigned sum, will vary from 
time to time and from place to place as the general price level rises or 
falls. The variations for this country are threefold. 

a) Variations from time to time .—These are by far the most impor¬ 
tant. During the war, American prices doubled. 

1 Prepared by Dorothy W. Douglas. 

272 


STANDARDS OF LIVING 


2 73 

b) Variations between different sections of the country {Northwest, 
South, Middle West, and Far West). —For strictly comparable com¬ 
modity standards in cities of the same size, the difference is not very 
great. The widest average intersectional variation, between the 
cities of the Northeast (most expensive) and the cities of the Middle 
West (least expensive) probably does not run over io per cent. 

c) Individual variations of cities of the same size within the same 
area .—Even the most extreme of these variations probably very sel¬ 
dom exceed io per cent. 

d) Variations between town and country are of course much more 
marked, with the costs usually lowest in the most rural sections, but 
we have no statistical evidence to tell us how great the difference is. 
Since, however, our cost-of-living studies deal exclusively with indus¬ 
trial workers, we are only concerned with the lesser variations between 
small and large towns. It is extremely unlikely that such variation 
ranges beyond io or, in extreme cases, 15 per cent. 

The basic standard of living that primarily interests students of 
labor is necessarily that of a normal family group rather than that of 
single men and women. The family inflow of goods and services 
must be such as to provide for the care of dependent children. The 
standard size of the family used by statisticians accordingly has been 
five persons, father, mother, and three children under four. The 
reasons assigned for selecting three children have been that five per¬ 
sons per family 1 roughly represents the actual average of American 
households according to the Census, and more significantly, that 
approximately three children per family is necessary to insure the 
perpetuation of the race. 

Some persons have objected to the inclusion of as many as three 
dependent children in the “normal” family, on the ground that the 
average working-class family does not usually have as many as three 
children below working age at any one time; and that where there are 
as many as three below working age at the same time, there are usually 
also one or more above working age, whose earnings go to swell the 
family exchequer. Be this as it may, the “standard” family up to 
this time is uniformly reckoned at five persons, three of them young 
children. 

For single men and women, the standard of living has ordinarily 
been assessed on the basis of their living away from home, i.e., a board- 

1 However, the Census includes under “ family ” all members of a household, 
including boarders and servants; to say nothing of the inmates of hotels and insti¬ 
tutions. 


274 THE worker in modern economic society 

ing commercial rate. For single men the assumption is ordinarily 
that their standard of living should include some savings for the future. 
For women, this item is usually omitted, and some students would 
even restrict their living expenses to what constitutes self-support 
within a family group. These questions will be taken up in greater 
detail later. 

One word of warning must be issued before turning to the history 
of American budgets, and that is that even the most rigorously out¬ 
lined of these budgets, by the very fact that it is a standard and not a 
mere average, reflects in a certain sense ideal rather than actual con¬ 
ditions of livelihood. If three-fourths of the families in a given com¬ 
munity live without drains, and typhoid is rife, and the investigator 
has. a preconceived standard of healthfulness in his mind, then his 
“minimum standard” of subsistence may include drains. Similarly, 
if three-fourths of the families spend an inordinate amount of their 
pay in fortnightly carousals, the investigator may choose to allow 
nothing for “spending money” save say enough for a weekly movie or 
two. In this sense, all standard budgets are to some extent “ideal”; 
and the delicate point is to find the closest possible approximation to 
both actual environmental possibilities and a “reasonable” preconceived 
standard. 

b) HISTORICAL DEVELOPMENT OE BUDGETS 

The earliest attempt to set up and apply a minimum standard on 
a large scale was made in England by Charles Booth about 1890. 
For seventeen years dating from 1886 he studied in enormous detail 
the “Life and Labour” (as his series of volumes was subsequently 
entitled) “of the People of London.” The entire East End of the 
city he actually examined by house-to-house tabulation (finishing in 
1889) and the rest by an elaborate series of samplings and estimates. 
Finding from experience that families with less than 18 shillings a 
week total income (about $4.50) were necessarily destitute, and even 
those around 20 shillings (about $5.00) in constant need, he classified 
his returns by income-groups, with the following results: 

“My ‘poor,’ may be described as living under a struggle to obtain 
the necessaries of life and make both ends meet; while the ‘very poor’ 
live in a state of chronic want. It may be their own fault that this is 
so; that is another question; my first business is simply with the 
numbers who, from whatever cause, do five under conditions of poverty 
or destitution.” 1 

1 Charles Booth, Labour and Life of the People of London (1891 ed.), I, 4. 


STANDARDS OF LIVING 


275 


For the city of London as a whole Booth found 30.7 per cent to be in 
poverty, of whom 1 per cent was in the lowest class while 7.5 per cent 
were very poor; 51.5 per cent were in the more comfortable sections 
of the working class, and 17.8 per cent in the middle and upper classes. 1 
He thus came to the astonishing conclusion that nearly a third of the 
population of the largest city in the world was in serious want. 

A decade later, in 1899, B. Seebohm Rowntree made an even more 
intensive study of the town of York. Practically every wage-earner 
of the entire city was canvassed, and his earnings and family circum¬ 
stances tabulated. Rowntree thereupon not merely assessed the total 
income of each family, but he compared it in each individual case to 
the size of the family, using a carefully worked-out standard of neces¬ 
sary per capita consumption, primarily for food, and secondarily for 
other bare necessaries. The food standard was, in quantity and cost, 
that of poor-house inmates fed at wholesale prices; the housing was 
the cheapest actually obtainable (i.e., the amount actually paid by 
each family, on the ground that rent is usually the first item that poor 
people economize in); fuel and housekeeping sundries were at a mini¬ 
mum, and the clothing enough for warmth and washing only, not for 
appearance. Nothing was allowed for pleasure, insurance, incidentals, 
or even sickness. 

Rowntree divided the families living in poverty into two groups: 
(1) Those whose total earnings were insufficient to secure the minimum 
necessaries for the maintenance of merely physical efficiency. To 
this type Rowntree gave the name of “ primary” poverty. (2) Those 
whose total earnings would be sufficient to maintain physical efficiency 
were it not that some of it was spent for other purposes, either useful 
or wasteful. Rowntree called this type “secondary” poverty. 

Some further idea of the stringency of the standard which Rown¬ 
tree set up for merely maintaining physical efficiency may be gained 
from his own description of it. 

A family living upon the scale allowed for in this estimate must never 
spend a penny on railway fare or omnibus. They must never go into the 
country unless they walk. They must never purchase a halfpenny news¬ 
paper or spend a penny to buy a ticket for a popular concert. They must 
write no letters to their absent children, for they cannot afford to pay the 
postage. They must never contribute anything to their church or chapel, 
or give any help to a neighbor which costs them money. They cannot save, 
nor can they join sick club or Trade Union, because they cannot pay the 
necessary subscriptions. The children must have no pocket money for dolls, 

1 Booth, op. cit., II, 20-21. 


276 


THE WORKER IN MODERN ECONOMIC SOCIETY 


marbles, or sweets. The father must smoke no tobacco, and must drink 
no beer. The mother must never buy any pretty clothes for herself or for 
her children, the character of the family wardrobe as for the family diet 
being governed by the regulation, “Nothing must be bought but that which 
is absolutely necessary for the maintenance of physical health, and what is 
bought must be of the plainest and most economical description.” Should 
a child fall ill, it must be attended by the parish doctor; should it die, it 
must be buried by the parish. Finally, the wage-earner must never be 
absent from his work for a single day. If any of these conditions are broken, 
the extra expenditure involved is met, and can only be met, by limiting the 
diet; or, in other words, by sacrificing physical efficiency. 1 

By comparing the cost of such a standard in terms of the varying 
number of mouths to be fed with the total family income, Rowntree 
found that 1,465 families comprising 7,230 persons were living in 
primary poverty. This was something over 15 per cent of the working 
class population of York and 9.9 per cent of the total population of the 
city. The incomes of these families were less than 21 shillings (about 
$5.15) a week on the basis of a family of five. In 52 per cent of the 
cases, the wage-earning members of these families were regularly 
employed but their wages were too low to enable them to secure even 
this rigid minimum. Largeness of family was the predominating 
cause for the primary poverty of 22 per cent, while the death of the 
chief wage-earner was the chief cause in 16 per cent of the cases, 
illness, unemployment and irregular work accounted for the remaining 
10 per cent. 

Rowntree found 15,700 more people were living in families whose 
incomes were less than six shillings ($1.40) more than the rigid mini¬ 
mum of 21 shillings, or proportionately for different sized families. 
This was equivalent to 33.6 per cent of the wage-earners of the city 
and 21.5 per cent of the total population of York. Since few could 
be expected to live according to the severe economizing set out in the 
standard, the result of Rowntree’s investigation was to corroborate 
the previous study of Booth. One of Rowntree’s most significant 
contributions was in pointing out that the life of a laborer is character¬ 
ized by “five alternating periods of want and comparative plenty.” 
In his early childhood (unless he is the son of a skilled worker) he is 
generally in poverty which will continue until either he or the other 
children begin to earn and thus raise the family income above the 
poverty level. Then while he is earning and living unmarried with 
his parents, he will have a surplus above his needs, even though paying 

1 B. Seebohm Rowntree, Poverty—A Study of Town Life, pp. 133-34. 


STANDARDS OF LIVING 


277 


his family for lodging and food. This continues until he is married 
and for the first year or so of married life until the children begin to 
come. If he has saved appreciably during his bachelorhood this may 
even continue until he has two or possibly three children. He will 
then, however, fall into poverty and remain there for probably at 
least ten years, or until one or more of the children begin to earn and 
turn their wages into the family purse. The more children there are, 
the longer this period of poverty will be. Then the family enjoys a 
period of relative prosperity while their children are earning. As the 
children marry and leave home, however, he and his wife sink back 
into poverty, since he is now getting old and he has never been able 
to save very much. A laborer is therefore in poverty and underfed 
in three periods: (1) in childhood, when his physical frame is being 
built up; (2) in early middle life, when he normally should be in the 
very prime of health, (3) in old age. Women are in poverty during 
most of the time they are bearing and rearing children. 

The 10 per cent in primary poverty therefore were only those in that 
condition at the time of the investigation. Others had either once 
passed through it or would do so in the future. The number who thus ' 
experience primary poverty at one time or another is thus greater than 
is indicated by the figures. 

In America, the cost-of-living studies that have been made have 
from the beginning been on a more generous scale. The inevitable 
primary social needs—for a little pleasure, a little going about, a 
newspaper, occasional contributions to church or charity or organiza¬ 
tions, and some provision for medical attention and burial insurance, 
have always been recognized. The quarrel between different types 
of investigators has been rather as to the major items of the budget— 
the proper minimum quality of the food, the necessary number of 
garments, the necessary replacements of household goods, and perhaps 
most of all the necessary decent minimum of housing. 

So long ago as 1900-1902 the U.S. Department of Labor conducted 
an elaborate investigation into the actual incomes and expenditures 
of over 25,000 wage-earning families scattered throughout the United 
States. 

This study made no attempt to set up derived standards of any 
sort, but confined itself to analyzing the actual habits of expenditure 
which the incomes of the successive groups of this large number of 
wage-earners made possible. (For each successive income-group the 
“cost of living” of course very nearly equaled the entire income.) 


278 THE WORKER IN MODERN ECONOMIC SOCIETY 


Out of the total 25,000 families investigated, the Bureau selected some 
11,000 for further study, as “normal” families. These “normal” 
families consisted exclusively 1 of wage-earning father, mother, and not 
more than five children, all under fourteen. 

The average income of these 11,000 “normal” families (twenty 
years ago, be it remembered) was about $650, of which on the average 
5 per cent remained as surplus. Expenditures were distributed 
roughly as follows: food, 43 per cent; housing, 18 per cent; fuel and 
light, 6 per cent; clothing, 13 per cent; all other, 20 per cent. 

A preliminary study by Mrs. L. B. More set $728 as the basic 
minimum (with allowance for some recreation, sickness, etc.) in New 
York for the period 1903-5. Dr. R. C. Chapin followed this up with 
a thoroughgoing investigation of some 600 families for the New York 
State Conference of Charities and Corrections. Families were finally 
chosen to approximate the standard-sized family of five. Chapin’s 
work was carefully done and his tentative conclusions were as follows: 

“It seems safe to conclude from all the data that we have been considering 
that an income under $800 is not enough to permit the maintenance of a 
normal standard. A survey of the detail of expenditure for each item in the 
budget shows some manifest deficiency for almost every family in the $600 
and $700 groups. Three-fifths of the families have less than four rooms. 
Fuel is gathered on the street by half of the $600 families and by more than 
one-third of the $700 families. One-third of the $600 families are not able 
to afford gas. One-third of the $600 families are within the 22-cent mini¬ 
mum limit for food, and 30 per cent of the $700 families spend 22 cents or 
under. In sickness the dispensary is the main dependency of these families. 
Each of them spends less than $10 annually in the average, on account of 
health, and only one family in ten in the $600 group and one in six of the 
$700 group spends anything for the care of the teeth. Recreation and edu¬ 
cation are reduced to their lowest terms. As to provision for the future, 
industrial or burial insurance is one of the necessities that the poorest 
families provide, and the returns show cases where something is saved out 
of a $700 income, but the savings are at the expense of essentials of the pres¬ 
ent, as is seen in the number of underfed families reporting a surplus at the 
end of the year. Whether an income between $800 and $900 can be made 
to suffice is a question to which our data do not warrant a dogmatic answer.” 

In 1909-10, a smaller, or medley neighborhood investigation was 
carried on in Chicago by J. C. Kennedy and others for the University 
of Chicago Settlement. After studying the actual expenditures of a 
large number of families in that neighborhood together with their 

1 “Exclusively,” i.e., families with older children, or with boarders, lodgers, 
or dependents were excluded. 


STANDARDS OF LIVING 


279 


needs and the prices of commodities, they framed a budget which 
provided among other things for four rooms, i| pounds of butter per 
week, one suit of clothes for the father per year and certain other 
similar items, including an allowance for health, insurance, newspapers, 
etc. The total of these items amounted to $733.62 and the report 
went on to state: 

“The above list includes no expenditures for church, which are made by 
at least nine-tenths of the families in this district; no expenditures for 
alcoholic liquors, which were made by all but one of the families studied; no 
expenditures for tobacco, barber bills, recreation, Christmas presents, ice¬ 
cream and candy, and a number of other items which are found in the budget 
of every family in this district that can afford it. Moreover, no allowance 
is made for the extraordinary expenses occasioned by birth, deaths, moving, 
etc., which must be met sooner or later by every family. If we allow $66.38 
per year to cover all these items, the necessary minimum expenditure for 
each family of five would be $800. We believe that no family of five can 
live decently and efficiently in the stockyards district on less than this 
amount.” 

Before the war, in other words, representative estimates of the 
cost of a minimum decent standard of subsistence in the larger Ameri¬ 
can cities ranged around $$bo. With the rapid inflation of prices 
accompanying the war, and the industrial unrest that went with uncer¬ 
tainty and the heavily competing demands on all sides for labor-power, 
the question of labor’s cost of living assumed new importance. 

The United States government, groups of employers and of 
employees) and finally disinterested private agencies of reform, all 
took a hand in assessing minimum standards. The government came 
first, both as the country’s largest direct employer of labor and as the 
arbiter of all wage disputes concerned with war industries. Naturally 
its first concern was to keep production uninterrupted, and this pre¬ 
occupation may have led its several agencies (the National War Labor 
Board and the Shipbuilding Labor Adjustment Board) to incline 
predominantly toward labor’s side of the balance. 

Be this as it may, it is noteworthy that the new budgets outlined 
by the government during this period took more account of the decen¬ 
cies and amenities of life than any of the accepted earlier standards. 
The term “minimum comfort budget” was first used at this time. 
William F. Ogburn, then examiner for the National War Labor Board, 
drew up most of these more-than-subsistence budgets. The U.S. 
Bureau of Labor Statistics in 1920 generalized Ogburn’s “comfort” 
data so as to furnish a strictly quantity budget applicable to different 
regions and industries. It calls this a “health and decency minimum.” 


28 o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


A comparison of two of Ogburn’s budgets, for the lower and higher 
grade shipyard workers, shows wherein the chief difference between 
the “minimum” and the “comfort” standard lies. At the comfort 
level the family spends a smaller proportion of its budget for food and 
a larger proportion for clothing and sundries. At the 1918 price level 
Ogburn’s “minimum” standard was supposed to cost a little under 
$1,400, and his “comfort” standard about $1,760, yet the cash allow¬ 
ance for food for the two families was almost practically the same. 

In framing his “subsistence” budget, Ogburn had in mind not 
only the actual expenditures of a large number (some 600) shipyard 
workers around New York whom he had studied, but especially the 
standard set up by Chapin in 1907. 

Taking this at around $800 rather than $900 and allowing some 
75 per cent increase in the prices level 1 from 1913 to 1918, Chapin’s 
standard in 1918 would have cost about $1,400. Meanwhile, however, 
from 1907 to 1913, prices had also been rising, though at a slower rate. 
(Food, for example, had increased by about a third.) Unfortunately 
the extent of this rise, which might reasonably be estimated at say 15 
to 20 per cent, is not known. However, costs in New York in 1907 
must have been somewhat higher than was general in smaller cities. 
Hence, for a country-wide estimate, Ogburn considered himself justi¬ 
fied in taking the New York standard over unchanged from 1907 to 
1913, and using as its equivalent in money for 1918, his sum of slightly 
under $1,400. 

It will be noted that in thus taking over the single standards of 
earlier investigations and using them as the lower of two differentiated 
standards—a “subsistence” and a “comfort”—Ogburn and his fellows 
were probably though unintentionally pushing these earlier standards 
down a little below where they were originally intended to go in the 
average person’s estimation. Chapin et al., had not intended their 
minimums like, for example, Rowntree’s, to represent bare physical 
subsistence; decency and normal social contacts were always included 
in them as well as mere health. 

After the Government, employers and employees took a hand in 
budget-setting. During the War, funds and time were not available 
to put their estimates on a very scientific basis, but with the cessation 
of hostilities and the continued soaring of prices, more careful budgets 
began to be made. 

The employers agency for this purpose has been the National Indus¬ 
trial Conference Board. Through their agent, Miss Margaret Stecker, 

1 As established by the U.S. Bureau of Labor Statistics. 


STANDARDS OF LIVING 


281 


they have made extensive cost-of-living surveys in a large number of 
industrial towns—in the East, the Middle West and even the South. 
As was to be expected, their estimates for the majority of these have 
run somewhat lower than those of previous students, but their method 
has had the great advantage of reflecting accurately some of the actual 
standards current in a great number of different communities. Both 
their weakness and their strength lies in this fact: their weakness, 
because any given customs of expenditure are necessarily dependent 
upon current wages; their strength because they portray for us how 
varied are the dominant standards in a series of communities chosen 
purposely for variety. 

The extremes of Miss Stecker’s budgets are shown in Fall River, 
Massachusetts, and three Southern cotton-mill towns on the one hand, 
and in Detroit on the other. Fall River is a textile center inhabited 
largely by French Canadians and Portuguese; the Carolina towns 
are typical southern cotton-mill communities with company houses 
and little contact with the outside world; both represent low-grade 
labor. Detroit, on the other hand, is the center of the automobile 
industry, with a large proportion of skilled American workmen. Wages 
in Fall River and the Carolina towns are notoriously low, in Detroit 
unusually high; the standard of life has adjusted itself accordingly 
in each case. 

While for food and clothing Miss Stecker’s prearranged quantity 
allowance is practically identical in the two extremes, for housing the 
difference is enormous—corresponding to the type of houses actually 
available in each case—which could of course in neither extreme press 
above the income level there current. 

Thus for Fall River we read: “The ordinary tenement in Fall 
River contains from three to five rooms with toilet—the majority of 
wage-earners do not have a bath—$2.25 a week or $117 a year for 
four rooms and toilet may be set as a minimum figure for housing a 
family of five in Fall River, according to existing conditions. $3.50 
a week or $182 a year will secure somewhat better accomodations.” 

For the Carolina towns we read: “Company houses .... are 
one story high, built of wood on brick piers .... most of them are 
ceiled inside. They are heated by coal grates and lighted by electricity. 
Few mill houses are plastered, which, added to the fact that they 
are built without cellars, makes them very difficult to heat. There 
are no bathrooms and few as yet have toilets or running water inside 
the house. Yearly rents (averaged) $45 for a four-room cottage. 
One mill in Charlotte owned a few four-room houses with stone 


282 


THE WORKER IN MODERN ECONOMIC SOCIETY 


foundations, baths and other conveniences, which raised the rent to 
$2 a week (i.e. $104 a year). This was not typical however.” 

In Detroit on the other hand, we are told: “The typical house in 
Detroit is a small cottage or a two-family house. The cottages usually 
contain five rooms and a bathroom. Very few American families in 

Detroit live in houses without a bathroom. Many houses, however, 

• 

were constructed very quickly in war time, and were built without 
basements; $35 a month (or $420 a year) is considered the minimum 
amount which should be allowed for housing an American family 
living at a minimum standard in Detroit in Sept., 1921. Such 
a cottage or flat would probably be heated by stoves rather than by 
furnace, but would have a bathroom, gas and electricity.” 

Employees as a body have not made as extensive cost-of-living 
surveys as have the employers. For the most part they have been 
contented to take over the commodities fisted in Ogburn’s Washington 
“Comfort Budget” (since expressed very clearly in quantitative terms 
by the U.S. Bureau of Labor Statistics), price them locally where a 
wage dispute was going on, and present them as their basic minimum. 
This the Labor Bureau, Inc., of New York did for the printing trades 
union of New York in the fall of 1920, with a resulting total budget 
of over $2,630. 

Besides the government, employers and employees, disinterested 
private organizations of a reform type have taken a hand in budget 
study. The leader of these is the Philadelphia Bureau of Municipal 
Research under the direction of Mr. W. C. Beyer. Beyer’s precon¬ 
ceptions appear on the whole to have been more like Chapin’s than 
like either of the bargaining groups; at any rate his resulting budget 
has on the whole steered a middle course between subsistence and 
“comfort.” 

His study, made in 1918-19, is indeed probably the most thorough 
and painstaking that has yet been made. He collected his material 
by means of an elaborate schedule from 260 Philadelphia wage-earning 
families. He then framed a basic standard in quantitative terms 
(“specified items”) and priced them at the prices of the fall of 1919. 
Some items such as household equipment, amusements, education, 
etc., could not be stated in quantitative terms. Beyer found that 
these “unspecified items” amounted to 18 per cent of the total expen¬ 
ditures in the families he had studied. He then added 21 per cent 
(or 18 per cent of 82 per cent) to the cost of the “specified” standard. 
By the winter of 1921, this had risen to $1,847. 


STANDARDS OF LIVING 


283 


A number of other detailed studies of the cost of living have been 
made which are shown on page 287 and from all of them we should 
be able to frame a fair definition of at least four working-class levels 
or standards of living. 

1. The poverty level .—A level at which the income, even though 
expended with ordinary prudence is insufficient under modern city 
conditions for even the physical upkeep of a family of moderate size. 
Characteristics: Undernourishment, overcrowding, deterioration of 
house-hold equipment and clothing, liability of acute distress with any 
minor disturbance of the daily equilibrium. The family is either not 
on a permanent basis of self-support or it is so at the expense of its 
physical vigor. In English manufacturing towns Rowntree found 
that a deficit of 25 per cent in the fuel value of such families’ 
dietary was not uncommon. In the larger American cities today 
(1923) families living on from $1,000 to $1,100 would be at this 
level. 

2. The minimum of subsistence level .—A level at which the income 
is sufficient for complete physical and material upkeep of a bare kind, 
but insufficient either for major emergencies or for any social pleasures 
that cost money. In practice families living at this level will have the 
social pleasures anyway, and probably will be somewhat undernour¬ 
ished and pretty surely a great deal overcrowded. They form the 
upper fringe of Rowntree’s food-deficit group (going in for adequate 
bulk but not necessarily adequate fuel-value in their dietary), live in 
three or at the most in four rooms in unimproved houses, or if they 
occupy larger quarters, take in boarders. Their expenditures for all 
“sundries” (i.e., all items other than food, rent, fuel, and clothing) 
will stay well below 20 per cent of the total, and their expenditure for 
food about 40 per cent. 

Some characteristic indications of the point at which the poverty 
level leaves off and the subsistence level begins have been pointed out 
by Professor William F. Ogburn as: 

Fuel-gathering ceases, at least as a major source of supply. The 
use of cast-off clothing ceases, at least as a major source of supply. 
The wife’s clothing budget rises to about 75 per cent of her husband’s. 
To this might be added that a family of five occupies at least three 
rooms. 

At the present time in the larger American cities families living on 
from $1,100 to $1,400 would be at a “subsistence” level. Typically 
their expenditures would be allocated about as follows: 


284 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Food. $500 (under $10 a week) 

man, about $70 
wife, about $50 

f$ 4 o) 

3 children .. < 


Clothing. $225 « 


about 40 per cent of total 


about 18 pei cent of total 


$35 $ io 5 
l $30, 

Housing. $245 (about $20 a month) about 19 per cent of total 

Fuel and light. $ 75 about 6 per cent of total 

Sundries. $210 (inc. all house furnishings) about 17 per cent of total 

Some of the other “sundries” would run about as follows: 


Health, about. $35 

Recreation, about. 20 

Education (newspapers, postage, etc.). 14 

Insurance, etc., about. 35 


3. The subsistence-plus (“minimum health and decency ”) level .— 
This is the level that practically all earlier American students of the 
cost-of-living problem attempted to describe. It allows explicitly for 
not only the physical but the elementary social necessities. In order 
to have some recreation, some paid medical attention, carfare, insur¬ 
ance, etc., a family living at this level need not “take it out of the 
food,” out of the mother’s clothing, or even out of the rent. Indeed 
the improvement in housing conditions is perhaps the simplest single 
index of the family’s easier circumstances. An abstract picture of 
such a “subsistence-plus” standard for cities might run somewhat 
like this: 

Housing: Five-room 1 cottage or flat in respectable neighborhood, 
in good repair probably with basement; running water, private toilet, 
probably bath; closet and cupboard space. 

Food: Allowance of approximately 3,500 calories (i.e., units of 
heat energy) per man per day; wife and children in proportion. For 
the standard family of five, about 3.3 to 3.8 times one man, or from 
11,500 to 13,000 calories. 

The quality of the dietary is indicated by the following items: 

Meat and fish (cheaper cuts only). 9 lbs. a week for family of five 

Meat substitutes: 

Dried beans and peas and cheese. 1 lb. a week for family of five 

Eggs. 1^ doz. a week for family of five 

Milk. 14 qts. a week for family of five 

1 Save in a very crowded metropolis such as New York, where four rooms 
would be approximately all that could be secured. 




















STANDARDS OF LIVING 


285 


Fats: 

Butter. | lb. a week for family of five 

Oleo. 1 lb. a week for family of five 

Lard, etc. i| lbs. a week for family of five 


Clothing: The clothing is throughout of the cheapest serviceable 
grade, but allows for enough replacements to make a thoroughly neat 
and respectable appearance. Thus the man would be allowed one 
suit and one extra pair of trousers a year, one-fourth of an overcoat, 
one-half cap, one-half felt and one-half straw hat, two dress shirts in 
addition to his work shirts, etc. At present prices the man’s clothing 
budget would cost perhaps $80. The wife in addition to her house 
dresses would have one-fourth suit and one-third coat a year, one-half 
velvet and one straw hat, one extra skirt, one-half homemade silk waist 
in addition to her two cotton ones, etc. The cost of her clothing bud¬ 
get would have risen to about 90 per cent of that of her husband. At 
present prices it would cost about $75. The children would each have 
three or four pairs of shoes and nearly a dozen pairs of stockings a 
year; the boys would each have one suit and two extra pairs of trousers, 
one-third overcoat, one cap, etc., in addition to overalls; and the girls 
would have half a dozen cotton dresses, one hat, one-half coat, etc. 
The total clothing costs for the three children would be about $135. 1 

Sundries: Among “sundries,” the family would be able to take 
not only a daily paper but either a Sunday paper or an occasional 
magazine, and still have a dollar or two a year left over for stationery 
and postage; it could go to the movies once a fortnight, and still have 
$5 to $10 a year left over for excursions and other forms of amusement; 
it could spend $.25 to $.50 a week all told for tobacco, ice-cream, candy, 
and soft drinks, and so on. In each item the stringency of the sub¬ 
sistence level of living would be a little relaxed. 

At autumn, 1922, prices such a “subsistence-plus” level of living 
in most American cities would probably have cost from $1,500 to 
$1,700. 

The expenditures would be allocated about as follows: 


Food. $550 ($10 to $11 a week) about 35 per cent of total 

Man, $80 
Wife, $75 


Clothing ... .$290 < 


Children . . 


($35 
- $45 
. $55 . 


► about 18 per cent of total 


1 About $35, $45, and $55 respectively, for the ages of six, ten, and thirteen. 











286 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Housing. $325 (about $20 to $25 a month) about 20 per cent of total 

Fuel and light $85 about 5 per cent of total 

All other.$350 about 22 per cent of total 

4. The comfort level .—This is the level that has come to public 

attention since the war. It represents the attainment of the highest 
class of wage-earners and the cynosure of the rest. 

TABLE XXXIII 

Total Amounts Required to Support Standard Family of Five 
According to Various Budgets* 





Amount of Budget 

Time 

City 

1 

Author 

Poverty 

Subsist¬ 

ence 

Subsist¬ 

ence 

Plus 

Health 

and 

Decency 

Com¬ 

fort 

IOCK. 

New York City 
New York City 
Mill towns of 

More 



$ 728 

825 


1907. 

Chapin 

U.S. Bureau of Labor 




I GOO. 





Georgia and 
North Carolina 
Fall River, Mass. 

Statistics 

00 

O 




1909. 

U.S. Bureau of Labor 





Statistics 

484 









IQI4. 

Chicago 

New York City 
Buffalo 

Kennedy 

Straightoff 

Straightoff 

Board of Estimate and 



800 


I9I4. 


$ 876 
772 


I9I4. 




1915. 

New York City 





Apportionment 

Board of Estimate and 



846 


1917. 

New York City 





Apportionment 

Ogburn 

Bellevue Hospital 



980 


1917. 

Seattle 



$1,506 

igi7. 

New York City 


1,018 






1918. 

Eastern indus- 







trial centers 

Ogburn 



1,386 


1918. 

Eastern indus- 





trial centers 

Ogburn 

Beyer 

U.S. Bureau of Labor 
Statistics 




1,760 

1918. 

Philadelphia 

Washington 



1,637 

August, 19x9_ 



2,262 

October, 1919... 
November, 1919. 

Fall River, Mass. 
Lawrence, Mass. 

Nat. Ind. Conf. Board 


1,268 

1,386 

1,574 

1,658 

Nat. Ind. Conf. Board 





January, 1920... 

Bituminous min¬ 
ing towns 

West Hoboken, 
etc. 

Ogburn 

Nat. Ind. Conf. Board 




2,244 

January, 1920... 


x ,610 


February, 1920.. 

Three Carolina 
cotton towns 

Nat. Ind. Conf. Board 


1,410 



May, 1920. 

Cincinnati, Ohio 
Worcester, Mass. 
Chicago 

Nat. Ind. Conf. Board 


1,692 

1,733 

1,733 


June, 1920. 

Nat. Ind. Conf. Board 




October, 1920... 

Council of Social Agen¬ 
cies 

1.175 



November, 1920. 
1920. 

New York City 
Meriden, Conn. 
Philadelphia 
Detroit 

Labor Bureau, Inc. 
Assoc. Charities 


2,633 


1,430 


August, 1921_ 

September, 1921. 
February, 1922 . 

Beyer 

Nat. Ind. Conf. Board 


1,847 

1,698 





Anthracite Re¬ 
gion of Pennsyl¬ 
vania . 

Nat. Ind. Conf. Board 


1,322 








*The assignment of these budgets into the classes “Poverty,” “Subsistence,” “Subsistence 
plus,” and “Comfort” has been somewhat arbitrarily done on the part of the editors, on internal 
evidence only. In many cases the authors of the budgets would have classed them differently. 











































































































STANDARDS OF LIVING 


287 


At the comfort level, the expenditures for food will not rise very 
much, the large increase being taken up almost entirely by clothing, 
housing, and especially “sundries.” The proportion spent for sundries 
increases in about the same ratio as the proportion spent for food 
decreases. Indeed a fairly good criterion of the point at which the 
“subsistence-plus” level is passed and the “comfort” level begins, 
would be the point where the expenditures for sundries passes the 25 
per cent mark. (This may be taken as analogous to the sudden 
increase in rent that usually marks the transition from a “subsistence” 
to a “subsistence-plus” level.) 

At present prices, the total cost of a “comfort” budget in most 
American cities would run about $2,100, and the principal budget 
items would be ranged approximately as follows: 


Food.$575 (about $11 a week) 29 per cent of total 

Man, $100 
Wife, $100 


Clothing. $350 < 


Children 


►.17-18 per cent of total 


$50 

k $60. 


Housing. $400 (about $30 to $35 a month) 20 per cent of total 

Fuel and light.. $125 6 per cent of total 

All other.$550 28 per cent of total 


The various important budgetary studies that have been made and 
the kind and cost of the standard set up were shown in Table XXXIII. 


2. CHANGES IN THE COST OF LIVING, 1913-1922 1 

The United States Bureau of Labor Statistics made a country 
wide budgetary investigation in 1918, whereby it secured the propor¬ 
tion which the various articles and classes of commodities formed of 
the wage-earners expenditures. The prices of these articles in the 
various cities were then found for December, 1914, and for the same 
month in the four following years. These were thereafter collected 
more frequently and the percentage increases or decreases were 
weighted by their relative importance in the budget. Table XXXIV 
shows the average fluctuations for thirty-two widely distributed 
cities from 1913 on—the increase from 1913 to December, 1914, being 

1 Adapted from the Monthly Labor Review, XV (August, 1922), 72; XVI 
(February, 1923), 131. 












288 


THE WORKER IN MODERN ECONOMIC SOCIETY 


estimated at 3 per cent. The estimated average for 1913 is taken as 
the base or 100. This is as far back as statistics for the total cost of 
living go. Prior to that time indices of food prices are our most reliable 
method of measurement. 


Date 


1913. 

December, 1914 
December, 1915 
December, 1916 
December, 1917 
December, 1918 

June, 1919. 

December, 1919 


TABLE XXXIV 


Average Relative 
Cost of Living 
(19x3 = 100) 

Date 

Average Relative 
Cost of Living 
(1913 = 100) 

100.00 

June, 1920. 

216.5 

103.00 

December, 1920. 

200.4 

105.1 

May, 1921. 

180.4 

118.3 

September, 1921. 

177-3 

142.4 

December, 1921. 

174-3 

174-4 

March, 1922. 

166.9 

177-3 

June, 1922. 

166.6 

199-3 

September, 1922. 

166.3 


December, 1922. 

169.5 


3. THE PROBLEM OF VARIATIONS IN THE SIZE 
AND COMPOSITION OF THE FAMILY 1 

As has been pointed out, practically all budgetary studies have used 
the family of five including three dependent children below the age of 
fourteen as their type for estimating costs. This is commonly defended 
on two grounds: (1) that the average family is of this size, (2) that it 
is necessary for at least three children to survive per marriage in order 
to secure the perpetuation of the race. 

Clearly, however, there is a large percentage of workmen’s families 
which are smaller than this as well as some that are larger. While it 
is probably true that most families pass through the stage when they 
have three dependent children of these ages, it is nevertheless also 
true that at any one time most families are not of this size. If less, 
they therefore will not need as much to live on. If more, they com¬ 
monly have more than one wage-earner to supply their needs. 

How then are we to compare the cost of maintaining these families 
of varying sizes with our “standard.” If it costs the latter $1,800 
a year to live on a health and decency level, how much will it cost a 
couple without children, a couple with one child; with two; with five ? 
An approximate answer to these questions must be found if we are to 
secure an estimate of the cost for individuals and families and not 
merely for a hypothetical type. 

1 Prepared. 






























STANDARDS OF LIVING 


289 


Messrs. King and Sydenstricker of the United States Public 
Health Service studied the actual consumption and expenditures of a 
large number of families in South Carolina cotton-mill villages and 
were able to measure the relative total costs for individuals of varying 
ages of both sexes (Table XXXV). The average for adult males of 
twenty-four is taken as 1.0 and others are compared with this. It 
should be emphasized that this covers all items of expense including 
food. 

TABLE XXXV 


Age 

Male 

Female 

Age 

Male 

Female 

I. 

.24 

.24 

20. 

.98 

.78 

3. 

•31 

•31 

25. 

1.00 

•79 

5. 

•35 

•35 

30. 

•97 

.78 

7. 

.40 

• 40 

2 C. 

•95 

.76 


OO 

9. 

• 44 

•43 

40 . 

•93 

•74 

11. 

•50 

.48 

45. 

.92 

.72 

13 . 

•59 

•55 

50 . 

.89 

.69 

15. 

•74 

•65 

60. 

.81 

.66 


It is of course probable that the relative total costs of women 
would be much higher in families above the subsistence group. The 
above figures, however, make it possible at least to approximate the 
relative expense of maintaining families of differing sizes. Thus 
the standard family of five would probably total somewhat as in 
Table XXXVI. 

TABLE XXXVI 


Person 

Age 

Relative Units 
of Costs 

Husband. 

40 

•93 

Wife. 

35 

.76 

Male child. 

13 

•59 

Female child. 

7 

.40 

Male child. 

3 

•31 

Total units of 



cost. 


2.99 


We may thus take 3.0 as the approximate number of cost units 
in this type of family. If the cost of maintaining a health and decency 
standard is $1,600, this would mean a cost of $533 per unit. We can 
thus determine how much it would cost a couple with five children 
to live on this standard. Let us assume the ages to be as in Table 
XXXVII (p. 290). 





















































290 


THE WORKER IN MODERN ECONOMIC SOCIETY 


It should not be pretended that this method should be followed 
strictly but it is valuable in reducing families of widely differing com¬ 
positions to a relatively comparable basis. 1 


TABLE XXXVII 


Person 

Age 

Units of Cost 

Husband. 

40 

•93 

Wife. 

35 

.76 

Male child. 

13 

•59 

Female child. 

11 

.48 

Male child. 

7 

.40 

Female child. 

3 

•31 

Male child. 

1 

.24 

Total units.... 


3.71 


Cost for the family=$ 533 X 3.7 = $i ,972 


B. The Distribution of Wealth and Income 

4. THE DISTINCTION BETWEEN WEALTH AND 

INCOME 

The statistics given concerning the probable distribution of wealth 
and income are likely to be misinterpreted unless the differences 
between the two are carefully noted. The fact that one man owns 
$100,000 worth of property, be it land or capital, does not necessarily 
mean that he can purchase in a year a hundred times the goods and 
services that another, with only $1,000 worth of personal effects, can 
buy. The only income advantage which the former’s wealth gives 
to him is the interest or rent which he secures from it. Let us suppose 
indeed that he is idle, and that his property income is $5,000 a year, 
while, to give an extreme illustration, the second man holds a $5,000 
position. The incomes of the two men and their power of purchase 
are equal. The fact that in this country, 65 per cent of the people 
probably own only 5 per cent of the wealth does not mean that they 
can purchase only 5 per cent of the goods and services which are pro- 

1 The student who wishes to follow this method through in greater detail is 
referred to the following three papers of Messrs. Sydenstricker and King: “A 
Method of Classifying Families According to Incomes in Studies of Disease Prev¬ 
alence,” Public Health Reports, XXXV (November 25, 1920), 28, 29 - 46 ; “The 
Classification of the Population According to Income,” Journal of Political Economy, 
XXIX (July, 1921), 571-95; “The Measurement of the Relative Economic Status 
of Families,” Quarterly Publications American Statistical Association , XVII, 842 - 59 . 




















STANDARDS OF LIVING 


291 


duced. The researches into our national income indeed indicate that 
in 1918, they 1 received approximately 39 per cent of the total income 
and hence could purchase that proportion of the nation’s goods and 
services. This difference between the 5 per cent of wealth and the 
39 per cent of income is due to the fact that the worker, since he is 
free and owns himself, does not count as wealth on the nation’s balance 
sheet, but nevertheless does secure an income from his labor. Income 
rather than wealth is then the important consideration in determining 
one’s ability to buy; whether it is the more important as regards 
security and power, is a different question. 

5. THE DISTRIBUTION OF WEALTH IN DIFFERENT 

COUNTRIES 2 

TABLE XXXVIII 


Class of Population 

Country and Date 

Percentage of 
Total Wealth 
Owned by 
Class 

Average Value 
of Estate in 
Dollars 

Money Value 
of Estate 
Compared to 
Wisconsin 
as Base 




Prussia 

1908 

4-9 

153 

40 

Poorest 65 per 

cent 

of the 

France 

1909 

4-3 

186 

49 

population... 



U.K. 

1909 

i -7 

133 

35 • 


• 


(Wis. 

1900 

5-2 

381 

IOO 




Prussia 

1908 

5-5 

743 

49 

Lower middle 

class, 

65-80 

France 

1909 

5-6 

1,052 

69 

per cent. 



U.K. 

1909 

2.9 

979 

64 




(Wis. 

1900 

4.8 

1,724 

100 




Prussia 

1908 

30.6 

3,445 

39 

Upper middle 

class, 

80-98 

France 

1909 

29.4 

4,602 

53 

per cent. 



U.K. 

1909 

23.7 

6,670 

76 



[Wis. 

1900 

33 -o 

3,730 

100 




Prussia 

1908 

59-0 

59,779 

44 

Richest, 2 per cent... 


1 France 
lU.K. 

1909 

1909 

60.7 

71.7 

85,500 

181,610 

6 3 

134 




[Wis. 

1900 

57-0 

135,715 

100 




'Prussia 

1908 

100.0 

2,226 

42 

All classes. 



I France 
lU.K. 

1909 

1909 

100.0 

100.0 

2,817 

5,067 

59 

106 




[Wis. 

1900 

100.0 

4,762 

IOO 


1 On the assumption that the lowest 65 per cent in ownership of wealth and 
receipt of income were the same persons, which in all probability they very nearly 
were. 

2 Adapted with permission from W. I. King, The W ealth and Income of the 
People of the United States , p. 96. (The Macmillan Co.) 


























292 


THE WORKER IN MODERN ECONOMIC SOCIETY 


6. THE DISTRIBUTION OF WEALTH IN MASSACHU¬ 
SETTS AT DIFFERENT PERIODS 1 

TABLE XXXIX 


Class of Population 

Date 

Percentage of 
Total of 
Estates 
Owned by 
Class 

Average 
Value of 
Estate in 
Dollars 

Real Value 
of Estate 
Compared to 
1859-61 

Poorest, 65 per cent of popu- 


f 1859-61 

6-5 

360 

TOO. O 

lation. 

« 

1879-81 

5-0 

377 

IOO.3 



1889-91 

4-5 

399 

138.4 

Lower middle class, 65-80 


f1859-61 

4.2 

1,009 

100.0 

per cent. 

« 

1879-81 

1.9 

622 

58.9 



1889-91 

3-9 

i ,499 

185-5 

Upper middle class, 80-98 


[1859-61 

32.4 

6,485 

100.0 

per cent. 

■< 

1879-81 

26.5 

7,224 

106.5 



1889-91 

32.8 

10,509 

202.3 



^859-61 

56.9 

102,500 

100.0 

Richest, 2 per cent. 

*< 

1879-81 

66.6 

163,415 

152.4 

• 


,1889-91 

58.6 

169,550 

206.6 


7. THE PROBABLE DISTRIBUTION OF INCOME IN 

ENGLAND IN 1906 2 

Taking the population of the United Kingdom at 43 million and 
the national income as $8,325,000,000, we get an average income per 
head of slightly less than $200. Thus if the income of the nation were 
evenly divided amongst its inhabitants, a family of five would enjoy 
an income of about $2,000 per annum. 

But how is the $8,325,000,000 actually divided amongst our peo¬ 
ple ? Contrasts between great riches and extreme poverty are every 
day presented to our eyes. Can we do anything to reduce tor a definite 
shape our vague conception of riches and poverty ? 

The $800 line at which assessment to the income tax begins divides 
the national income into two almost equal parts. Those persons hav¬ 
ing more than $800 per annum enjoy an aggregate income of 4,050 
millions of dollars, while those who have less than $800 a year enjoy 

x W. I. King, op. tit., p. 79. 

2 Adapted with permission from L. G. Chiozza-Money, Riches and Poverty, 
pp. 29-43. (Methuen & Co.) 






















STANDARDS OF LIVING 


293 


an aggregate income of 4,275 millions. The number of income tax 
payers is as follows: 

Incomes Number 

$8oo-$3,5oo. 750,000 

Over $3,500. 258,000 

Total. 1,008,000 

In round numbers we may say then that one million people receive 
over $800 per year. If we assume that each of these is the head of a 
family of five, we get the result in Table XL. 

Broadly speaking, nearly one-half of the entire income of the 
United Kingdom is enjoyed by but one-ninth of its population. 


TABLE XL 



Number of Persons 

Incomes in Mil¬ 
lions of Dollars 

Incomes over $800.. 

5,000,000 

(1,000,000X5) 

38,000,000 

(total population less 5,000,000) 

$4,050 

4,275 

Incomes less than $800. 

Total. 

43,000,000 

$8,325 



But a still more extraordinary conclusion emerges from the facts 
we have examined. Of the 1,000,000 income tax payers, 750,000 are 
persons with small incomes ranging from $800 to $3,500. The aggre¬ 
gate income of these 750,000 persons we estimated at 1,200 millions 
and the estimate is a liberal one. By subtraction from the total 
income of the income tax groups (4,050 millions), we see that the 
250,000 rich persons with $3,500 and upwards per annum possess an 
aggregate income of 2,950 millions of dollars. See Table XLI. 

Thus to the conclusion that nearly one-half of the entire income 
is enjoyed by but one-ninth of its population, we must add another 
even more remarkable, viz., that more than one-third of the entire income 
of the United Kingdom is enjoyed by less than one-thirtieth of its people. 

The great fact emerges that the enormous annual income of the 
United Kingdom is so badly distributed amongst us that, out of a 
population of 43,000,000, as many as 38,000,000 are poor. It is no 
longer incredible that in a population of 43,000,000 people, enjoying 
an aggregate income of $8,325,000 there exist “30 per cent living in 
the grip of perpetual poverty.” When we realize 38,000,000 out of 
our 43,000.000 are poor, the United Kingdom is seen to contain a 



















294 


THE WORKER IN MODERN ECONOMIC SOCIETY 


great multitude of poor people, veneered with a thin layer of the com¬ 
fortable and the rich. 

TABLE XLI 


• 

Number in 
ooo’s 

Income in 
Millions of 
Dollars 

Percentage of 
Population 

Percentage of 
National 
Income 

Riches: 

Persons with incomes of over 
$3,500 per annum and their 
families (230,000X5). 

1,250 

2,925 

3 

35 

Comfort: 

Persons with incomes between 
$800 and $3,500 per annum and 
their families (750,000X5). 

3,750 

1,200 

9 

14 

Poverty: 

Persons with incomes of less 
than £160 per annum and their 
families. 

38,000 

4,275 

88 

51 

Total. 

43,000 

8,325 

100 

IOO 


8. A STUDY OF THE TOTAL NATIONAL INCOME IN 

THE UNITED STATES 1 

The National Bureau of Economic Research has made a very 
thorough study of the amount and distribution of the national income 
of the United States, entitled Income in the United States, 1909-1919. 
Table XLII shows the estimated total national income by years. 

The Bureau’s estimate for the year 1918 is given below. It 
should be noted that this is a study by persons, not by families. 


TABLE XLII 


Year 

National Income 
Billions of 
Dollars 

Weighted Index 
of Prices 
(1913 = 100) 

Purchasing 
Power Income 
1913 Price Level 
(Billions of 
Dollars) 

1909. 

28.8 



1910. 

3 1 • 1 

97.8 

31.8 

1911. 

31.2 

98.5 

3 i -7 

1912. 

32.4 

99-4 

32.6 

1913 . 

33-3 

100.0 

33-3 

I 9 H. 

32.5 

100.6 

32.3 

1915 . 

35-9 

102.5 

35 -o 

1916. 

45-5 

II 3-4 

40.1 

1917 . 

53-9 

136.1 

39-6 

1918. 

61.7 

160.8 

38.4 

1919 . 

66.0 

176.8 

37-3 


1 Adapted with permission from Income in the United States, pp. 71, 76, 85, 97, 
I 34“35- (Harcourt Brace & Co.) 












































STANDARDS OF LIVING 


295 


Family incomes, at least in the lower economic classes, would average 
considerably higher than the distribution by persons, since ordinarily 
income would be received from more than one person. 

TABLE XLIII 


Annual Income 
Less than 

Cumulative 
Percentage of 
Persons 

Cumulative 
Percentage of 
Incomes 

$ 600. 

9-5 

2.4 

800. 

22.4 

8-3 

1,000. 

38.7 

17.9 

1,200. 

54 - S 

29.1 

d 

0 

H 

67.1 

39-7 

1,600. 

76.0 

48.3 

1,800. 

82.0 

54-9 

2,000. 

859 

59-7 

2,500. 

91.4 

67.5 

3,ooo. 

94.1 

72.3 

4,000. 

96.6 

77-9 

5,ooo. 

97.8 

81.2 

6,000. 

98.4 

83-5 

8,000. 

99.0 

86.3 

10,000. 

99-3 

88.0 

15,000. 

99.6 

90-5 

25,000. 

99.9 

93-6 

50,000. 

99-94 

95-3 

100,000. 

99.98 

96.9 

500,000. 

99.998 

99.1 

1,000 000. 

99.9996 

99-5 

Over 1,000,000. . 

.0004 

•5 


Income per capita .—What was the income per capita during this 
period ? The first column of Table XLIV gives the estimate of the 


TABLE XLIV 


Year 

Per Capita 
Income in 
Dollars 

Per Capita In¬ 
come in Dollars 
(in Terms of 
1913 Price 
Level) 

1909 . 

319 

333 

1910. 

340 

349 

1911. 

333 

338 

1912. 

346 

348 

1913 . 

354 

354 

I 9 H. 

335 

333 

1915 . 

358 

350 

1916. 

446 

400 

J 9 T 7 . 

523 

396 

1918. 

586 

372 

















































296 


THE WORKER IN MODERN ECONOMIC SOCIETY 


National Bureau of Economic Research by years in terms of the price 
level of each year. The real increase from year to year because of the 
rise in prices was of course much less than that indicated by these 
figures, and in the second column they have been reduced to a common 
price level—that of 1913, and hence made comparable. 

Per capita income of various countries. —A comparison of the 
national incomes at the outbreak of the war of four countries, for which 
estimates, whose margin of error probably does not exceed 10 per 
cent, shows that the United States has not only a much larger national 
income but also a higher per capita income. These estimates it should 
be remembered are for 1914 and are for the most prosperous of the 
larger nations. 

TABLE XLV 


Country 

National Income 
in Billions 

Income per 
Capita 

United States. . . 

33-2 

335 

United Kingdom. 

IO.9 

243 

Germany. 

IO.5 

146 

Australia. 

i -3 

263 


Distribution of the national income among economic classes .— 1 The 
Bureau secured data on the proportion which the amount expended 
for wages and salaries in the various lines of industry formed of their 
net value product, i.e., selling price less cost of raw materials, and 
services received from other industries. They found that the average 
for all industries as a whole in 1918 was 54 per cent and that this had 
not fluctuated more than 2 per cent during the nine previous years. 
This percentage covers only the amount paid out specifically to hired 
labor in the form of wages and salaries. It does not include that por¬ 
tion of the incomes of farmers, small-shop keepers, etc., which is prop¬ 
erly due to their own labor. These men receive a composite income, 
derived not only from labor, but, frequently as well from all of the 
three remaining factors of production: namely, capital, land and 
management. It is impossible satisfactorily to disentangle the pro¬ 
portion which the return for labor forms of these composite incomes 
and consequently the percentage given does not measure the share of 
labor but merely the share of the hired wage earners. 

The proportion thus paid varied widely from industry to industry. 
In 1918, it was only 10 per cent for agriculture, due to the vast amount 












STANDARDS OF LIVING 


297 


of labor performed by the farmers themselves and by their families; 
it was but 37 per cent for banking, due to the large amounts of capital 
invested; on the other hand, it was 78 per cent in manufacturing, 
the same in railway transportation, and 90 per cent in government 
service. 

The proportion devoted to wages and salaries on the one hand 
and to management and property (including rent, interest and divi¬ 
dends) was found for the three fields of manufacturing, mining, and 
land transportation for the 10 years from 1909 to 1918. This division 
between what might be termed “service” income and “property” 
income was as in Table XLVI. 


TABLE XLVI 


Year 

Millions of Dollars 

Percentage 

Wages and 
Salaries 

Management 
and Property 

Wages and 
Salaries 

Management 
and Property 

1909 . 

$ 6,481 

$2,950 

68.7 

31-3 

1910. 

7,156 

3,250 

68.8 

31.2 

1911. 

7,287 

2,791 

72.3 

27.7 

1912. 

7,993 

3,169 

71.6 

28.4 

1913 . 

8,651 

3,359 

72.0 

28.0 

1914 . 

7,947 

2,816 

73-8 

26.2 

1915 . 

8,722 

3,470 

7 i -5 

28.5 

1916. 

11,630 

5,810 

66.7 

33-3 

T 9 X 7 . 

14,375 

6,502 

68.9 

3 1 • 1 

1918. 

17,472 

5,124 

77-3 

22.7 


It will be seen from the above that the share of wages and salaries 
varied from two-thirds to three-quarters of the net product and that 
of management and property fluctuated between one-quarter and one- 
third. The larger proportions received by management in 1916 and 
1917 were undoubtedly due to the great development of business 
prosperity in those years, when selling prices rose more rapidly than 
labor costs, leaving a larger residue of profit for the owners. 


C. Wages and Earnings 

[Note. —For a distinction between the meanings for various terms 
such as wages, earnings, etc., see (1) chapter vii, Selection 3, and 
(2) chapter xii.—E d.] 



























298 THE WORKER IN MODERN ECONOMIC SOCIETY 


9. WEEKLY EARNINGS AND YEARLY INCOME 

a) THE PERIOD 1900-15 

During the first decade and a half of the century a number of 
wage studies were made which threw significant light upon the question 
as to the adequacy of wages to maintain a reasonable standard of life. 
The more valuable of these are summarized below. 

1. Annual incomes of heads of families in 1903 .—In 1903, the 
United States Bureau of Labor made a thorough investigation of 


TABLE XLVII 

Percentage of Heads of Families Earning Less than Each 

Specified Amount* 



Under 

$300 

Under 

$500 

Under 

$600 

Under 

$700 

Under 

$800 

Bakers. 

3 

19 

37 

65 

94 

Blacksmiths. 

2 

10 

25 

42 

66 

Boilermakers. 

2 

6 

17 

34 

60 

Bricklayers. 

2 

6 

14 

23 

42 

Carpenters. 

4 

22 

40 

64 

86 

Cigar makers. 

4 

30 

48 

7 i 

88 

Retail clerks. 

1 

9 

26 

46 

69 

Coal miners. 

7 

59 

81 

93 

98 

Teamsters. 

5 

36 

63 

89 

98 

Freight handlers. 

1 

64 

84 

97 

100 

Laborers (iron and steel). 

7 

69 

92 

99 

100 

Laborers (textiles). 

22 

9 1 

99 

100 

100 

Machinists. 

0 

5 

15 

35 

72 

Laborers (misc. mfg.). 

12 

75 

9 i 

99 

100 

Masons. 

4 

15 

26 

4 i 

67 

Moulders. 

1 

8 

18 

38 

68 

Printers. 

3 

19 

45 

72 

87 

Plasterers. 

1 

13 

27 

46 

70 

Plumbers. 

1 

3 

8 

19 

37 

Stonecutters. 

3 

9 

19 

28 

52 

Tailors. 

3 

3 i 

54 

63 

75 

Total (for all industries).... 

4 

30 

48 

65 

82 


♦Adapted from Eighteenth Annual Report, United States Bureau of Labor, pp. 283-85. 


approximately 25,000 families and secured data on their incomes. 
Table XLVII shows the yearly incomes of the heads of families. 

The fact that three-tenths received less than $500, nearly one-half 
less than $600, and that approximately two-thirds received less than 
$700 are especially significant. The low earnings in the iron and steel 
industry and among the textile laborers should be particularly 
observed. Seven hundred dollars was probably the necessary amount 










































STANDARDS OF LIVING 


299 


for a family of five to maintain a minimum of subsistence-plus standard 
in most American cities at that time. 

2. Earnings and family incomes of the immigrants and those of 
immigrant stock in industry during the year iqo 8 - q . —The United States 
Immigration Commission in its monumental report studied the individ¬ 
ual and family earnings in some 17,000 households widely distributed 
over the United States. It should be remembered that these were 
composed either of the foreign-born themselves, or of the native-born 


TABLE XLVIII 

Average Annual Earnings of Immigrant Stock in American 

Industry 1908-9* 


Industry 

No. of 
Households 

Average 
Annual 
Earnings 
Males 18 
and Over 

Average 
Annual 
Earnings 
Male Head 
of Families 

Average 

Annual 

Family 

Income 

Iron and steel manufacture. 

2,456 

$346 

$409 

$568 

Woolen and worsted manufacture. 

440 

346 

400 

661 

Cotton goods manufacture. 

I,o6l 

401 

470 

791 

Leather manufacture. 

362 

431 

511 

671 

Silk goods manufacture and dyeing 

272 

431 

448 

635 

Bituminous coal mining. 

2,371 

443 

451 

577 

Manufacture boots and shoes.... 

710 

502 

573 

765 

Clothing manufacture. 

906 

5 L 3 

530 

7 i 3 

Sugar refining. 

194 

522 

549 

661 

Slaughtering and meat packing... 

1,039 

557 

578 

78 i 

Glass manufacture.•.. 

660 

574 

596 

755 

Furniture manufacture. 

338 

575 

598 

769 

Oil refining. 

525 

59 i 

662 

828 

Glove manufacture. 

262 

625 

650 

904 

Collar, cuff, shirt manufacture.... 

264 

637 

662 

861 

Total (in all industries includ¬ 
ing some not specified above) 

17,141 

475 


721 


* From Report of U . S . Immigration Commission , Vol. 20, pp. 16; 389-90; 374; 4i3- 


of foreign parentage. It is therefore probable that their earnings were 
not characteristic of all American labor at that time but they were 
probably typical of those in the unskilled and possibly the semi¬ 
skilled groups. 

The distribution of these earnings according to the amounts 
received is shown in Table XLIX. 

It will be noticed from the above that 61 per cent of all males 
over eighteen, and 51 per cent of the heads of households, received 
less than $500 a year. Three-quarters of all the males were receiving 
less than $600 a year as were two-thirds of the heads of households. 





























300 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Only 7 per cent of all the males and 11 per cent of the heads of house¬ 
holds received more annually than $800. 

The proportion of the total family incomes which fell in the various 
groups was as in Table XL. 


TABLE XLIX 


• 

Annual Income 

Males over 18 

Heads of Households 

Percentage 
in Group 

Percentage 
Under Group 
Above 

Percentage 
in Group 

Percentage 
Under Group 
Above 

Under $300. 

21 

21 

14 

14 

$300-$400. 

20 

41 

18 

32 

400- 500. 

20 

61 

19 

51 

500- 600. 

14 

75 

16 

67 

600- 700. 

IO 

85 

12 

79 

700- 800. 

8 

93 

IO 

89 


The total income of slightly over three-tenths of these families 
at this time was therefore less than $500 a year, while approximately 
two-thirds in all received less than $750 a year. Only 18 per cent 
received over $1,000 a year. 

TABLE L 


Total Family Income 

Percentage 

Annual Income 

Percentage in 
Group 

Ui 4 der Group 
Above 

Under $300. 

8 

8 

$300- $500. 

23 

3 i 

500- 750. 

33 

64 

750- 1,000. 

18 

82 

Over $1,000. 

18 





b) THE PERIOD 1915-19 

i. Family incomes in 1918 .—The United States Bureau of Labor 
Statistics made an investigation in ninety-two localities within forty- 
three states of some 12,000 white families and approximately 750 
colored families. Special attention was paid to the total income of 
these families for the year. 

The families studied were chosen to conform to the so-called 
standard family of five. In addition the following varieties of families 
were excluded: (a) those without husbands at work, (b) those keeping 
boarders or more than three lodgers, (c) those where children lived 





































STANDARDS OF LIVING 


3 01 


with the family in the position of boarders, (d) those where less than 
75 per cent of the family income was derived from wages. This 
resulted in securing families averaging approximately five in number 
where the husbands wages were the primary source of family income. 

TABLE LI 

Earnings of Family and of Husband by Size of Family and 

Income Group* 


Income Group 

Number of 
Families 

Percentage 

of 

Families 

Average 

Persons 

Per 

Family 

Average 

Family 

Earnings 

Average 

Husband’s 

Earnings 

Percentage 
Husband’s 
of Total 
Earnings 

Under $900.. 

332 

2.74 

4-3 

$ 782 

$ 766 

97-9 

$900-$ 1,199. 

2,423 

22.7 

4-5 

1,037 

1,014 

97-7 

$i,200-$i,499. 

$r, 500 ~$i ,799 . 

3,959 

2,730 

55-5 

78.1 

4 - 7 

5 - 0 

1,294 

1,566 

1,252 

1,488 

96.8 

95 0 

$i,8oo-$2,099. 

1,594 

92.3 

5-2 

1,854 

1,691 

91.2 

$2,ioo-$2,499. 

705 

97.1 

5-7 

2,161 

1,786 

82.75 

$2,500 and over. 

353 

2.92 

6.4 

2,684 

1,796 

66.9 

Totals. 

12,096 

100.00 

4.9 

1,455 

1,349 

92.73 


* Adapted from Monthly Labor Review (December, 1919), pp. 29-41. 


The average family income for all the 12,000 families was $1,513; 
$1,349 of this was derived from the earnings of the husband while the 
remainder came from the earnings of others in the family circle and 
from other sources. Forty-four per cent secured some income from 
their gardens though the amount was very small. 

2. Actual weekly earnings in igi8 and 1920 as a basis for estimating 
yearly earnings A—The National Industrial Conference Board, an 
association of employers, made a wage study of twelve industries in 
1918 and 1920. Amongst other data, they secured the average actual 
weekly earnings for these industries and these offer interesting side¬ 
lights upon the question of the adequacy of the wages paid in terms 
of the various accepted standards of living. 

Table LII shows the average actual weekly earnings for male 
employees in September, 1918, and March, 1920, and what the average 
yearly wage would have been at this rate had fifty-two weeks been 
worked. 

These statistics can be supplemented by those collected by the 
United States Bureau of Labor Statistics in its industrial survey of 

1 Adapted from Paul H. Douglas, “An Examination of the Wage Statistics 
of the National Industrial Conference Board,” Quarterly Publications American 
Statistical Association (September, 1921), pp. 900-904; and “Wages and Hours 
of Labor in 1919,” Journal Political Economy , XXIX (January, 1921), 78-80. 

































3° 2 


THE WORKER IN MODERN ECONOMIC SOCIETY 


1919 covering plants employing 405,000 workmen in twenty-eight 
industries. The average number of hours worked by the male 
employees was 45.6 per week and the average earnings per hour were 
i 56.i cents, making the average weekly earnings $25.61. With fifty- 
two weeks of such employment, the average yearly earnings would 
have been $1,332. This, however, is merely an average. Ten per 
cent of the male employees were employed for less than twenty-four 
hours a week, and reckoning cumulatively, 16 per cent were employed 
for less than thirty hours, 22 per cent less than thirty-six hours, and 
31 per cent less than forty-two hours. Assuming that these short- 

TABLE LII 

Average Earnings of Male Employees in Twelve Industries as 
Reported by the National Industrial Conference Board 


Industry 

September, 1918 

March, 1920 

Average 
Actual 
Weekly 
Earnings (a) 

Average 

Yearly 

Earnings 

(0X52) 

Average 
Actual 
Weekly 
Earnings (c) 

Average 
Yearly 
Earnings 
(cX 52) 

Boots and shoes. 

$23.62 

$1,228 

$28.70 

$1,492 

Chemical manufacturing.. . 

25.24 

D 3 I 2 

35-72 

1,857 

Cotton manufacturing. 

20.50 

1,066 

24.87 

1,293 

Furniture manufacturing. 

17-39 

904 

22.87 

1,189 

Hosiery and knit goods. 

22.50 

1,170 

27.65 

1,438 

Leather. 

23 - 3 6 

1,215 

30.18 

1,569 

Metal manufacturing. 

2 7-73 

1,442 

29.79 

D 549 

Paper manufacturing. 

23.20 

1,206 

28.82 

D 499 

Printing and publishing. 

23.69 

1,232 

31.67 

1,647 

Rubber manufacturing. 

27-93 

D 452 

36-32 

1,889 

Silk manufacturing. 

21.48 

1,117 

28.98 

1,507 

Wool manufacturing. 

22.93 

1,192 

28.70 

1,492 


time workers received the average hourly wage of the groups as a 
• whole, a weeks’ work of twenty-four hours would then net only $13.66 
and, if this were typical of the year as a whole, the yearly earnings 
would be $710; a thirty-hour week would bring in $16.83 or at a yearly 
rate of $875; a thirty-six-hour week would amount to $20.20 or the 
yearly equivalent of $1,050 while a week of forty-two hours would 
spell weekly earnings of $23.56 and a yearly earning rate of $1,225. 
Part of the apparently short hours worked was undoubtedly caused 
by labor turnover and thus probably making the yearly personal 
earnings more than is otherwise indicated. 

When these wage statistics are compared with the amounts neces¬ 
sary to maintain a family of five at these times, proof is furnished of 




























STANDARDS OF LIVING 


3°3 

the inadequacy of the average adult male’s wage to support a family 
of five. The most conservative and the most carefully worked out 
budget for the fall of 1918 is that of the Philadelphia Bureau of Muni¬ 
cipal Research which fixed $1,637 as the amount necessary to support 
a family of five on “a minimum standard of health and comfort.” 
The Philadelphia budget is indeed probably only slightly above a 
minimum of subsistence. This Philadelphia quantity budget was 
revised in November, 1919, and in August, 1920, being increased to 


TABLE LIII 

Indicated Yearly Earnings Compared with Amount Necessary to 
Maintain the Philadelphia Standard 


Industry 

September, 1918 

March, 1920 

Amount 
Needed to 
Bring Full- 
Time Yearly 
Earnings to 
Minimum 

Percentage 
Increase 
Needed to 
Bring Full- 
Time Yearly 
Earnings to 
Minimum 

Amount 
Needed to 
Bring Full- 
Time Yearly 
Earnings to 
Minimum 

Percentage 
Increase 
Needed to 
Bring Full- 
Time Yearly 
Earnings to 
Minimum 

Boots and shoes. 

$409 

33 

$393 

26 

Chemical manufacturing. 

325 

26 

28 

2 

Cotton manufacturing. 

571 

54 

592 

46 

Furniture manufacturing. 

733 

81 

696 

59 

Hosiery and knit goods. 

467 

40 

447 

31 

Leather. 

422 

35 

3 r 6 

20 

Metal manufacturing. 

195 

14 

336 

22 

Paper manufacturing. 

431 

36 

386 

26 

Printing and publishing. 

405 

33 

238 

14 

Rubber manufacturing 

185 

13 

4* 





Silk manufacturing. 

520 

47 

378 

25 

Wool manufacturing. 

445 

37 

393 

26 


* Indicates excess. 


$1,803 in the former month and $1,988 in the latter. If we assume 
that the increase was evenly distributed throughout these nine months, 
we would have a figure of $1,885 as the necessary amount in March, 
1920. If we compare the average yearly wages for the various indus¬ 
tries as given in the Table LII (on the basis of fifty-two weeks’ 
work) with this budget, we see very clearly the inadequacy of the 
average wages of males, even during the periods of greatest business 
activity, adequately to support a family of five. 

In the fall of 1918, therefore, the average wage in every one of 
these industries was much less than the amount required to support 
a family of five. This deficiency, save for metal and rubber manu¬ 
facturing, ranged from $300 to over $700. An increase of from 23 





























304 THE WORKER IN MODERN ECONOMIC SOCIETY 

to 81 per cent was needed to bring the average earnings in ten of the 
twelve industries up to the minimum. By 1920 the situation was 
somewhat improved, but even then in only one industry would the 
full-time yearly earnings have been sufficient for supporting the stand¬ 
ard family. In nine of the twelve industries the gap between the 
yearly rate of earnings and the minimum was over $300, and in one 
it was nearly $700. In these nine industries, increases ranging from 
22 to 59 per cent were needed to bring the average yearly rate up to 
the minimum. 

Now three objections may be urged against drawing the conclusion 
from the above that wages are inadequate: (1) That the standard of 
living chosen applied only to Philadelphia and cannot be used as a 
standard for the rest of the country. It is of course true that the cost 
of living does vary from locality to locality, but it is also undoubtedly 
true that these differences, at least in industrial centers, are not so 
great as are commonly supposed. Moreover, we have no information 
that would lead us to infer that the cost of living in Philadelphia is 
less than in other large manufacturing centers. It is however probably 
higher than in smaller cities. (2) That the earnings of the male should 
not necessarily cover the cost of living for the family as a whole, since 
it is only proper to expect the family to receive income from other 
sources. This is a proposition to which one may give a qualified assent 
subject to judgment as to the specific source of income. Thus, while 
the work of the wife outside the home is sometimes proper when there 
are no children, it should be indulged in only in the rarest circumstances 
when there are children. The contributions of children over sixteen 
or indeed over fourteen may also be proper. Income from boarders 
is a source upon which a general conclusion is impossible since although 
it may be proper in some instances, in many others it is not. In gen¬ 
eral, however, we should beware of making total family income the 
test of the adequacy of the wage. The attempts of the family to 
secure supplementary income may indeed seriously impair the family 
life and vitality. (3) That since many men have either no dependents 
or less than four we should not use the family of five as the standard 
by which to measure the adequacy of men’s wages, but should instead 
use a smaller family. A great deal of research is needed to determine 
how well-grounded such a contention is. At the present time we lack 
adequate information as to the proportion of adult males in the United 
States who have such a standard family, as well as the proportion that 
have more and those that have fewer dependents. Pending such 
fuller research and information, it does not seem wise to discard for 


STANDARDS OF LIVING 


305 


the present at least the currently accepted standard in favor of a 
smaller family, particularly in view of the fact that even the present 
standard does not include ( a ) the initial cost of family furniture and 
fittings; ( b ) the expenses connected with the birth of children; ( c) 
an adequate protection against the risks to which the worker is sub¬ 
jected; and (d) a proper provision for a human depreciation fund to 
protect the worker against industrial old age. 

Although the above points might lead one to suppose that the 
indicated inadequacy of the wage is an overstatement, the following 
factors operate in the opposite direction: (1) The standard of living 
chosen was a most conservative one and one which many experts would 
increase. (2) The estimated yearly earnings were based upon working 
the full fifty-two weeks during the year at the same rate as during the 
period studied. This makes no allowance for unemployment save for 
such broken time as occurred during the period under consideration. 
When we remember that the amount of unemployment over a period 
of years is probably at least 10 per cent, this consideration assumes 
great importance. (3) The periods chosen were characterized by a 
great deal of overtime which would be non-existent at other points 
in the business cycle when many even of those regularly employed 
would work only part-time. (4) Finally, it should be remembered 
that the above figures were only averages. There was, therefore, a 
very large body of workers who received less than the amounts indi¬ 
cated. 

Although it is manifestly impossible to balance these unknown 
quantities with any degree of even approximate accuracy, it does seem 
most probable from the figures of the National Industrial Conference 
Board itself that during the most outwardly prosperous period in our 
recent economic history a very large section of our working population 
did not receive a wage high enough to maintain a “decent” standard 
of living. 


THE WORKER IN MODERN ECONOMIC SOCIETY 


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STANDARDS OF LIVING 


307 


10. WAGES IN RELATION TO THE COST OF LIVING 
AND THE PRODUCT OF INDUSTRY 

a) THE RELATIVE MOVEMENT OF REAL WAGE RATES, 1890 I918 1 

This study is an attempt to carry forward to 1918 a study made by 
Dr. M. Rubinow for the period 1890-1912. It will be remembered 
that Dr. Rubinow’s computations showed a decline in the purchasing 
power of hourly wages in terms of food from the 1890-99 average to 
1912 of 8.2 per cent of the purchasing power of “full-time” weekly 
earnings of 14.7 per cent. If this study can then be carried on to 
1918, we would have a fairly accurate picture of the movement of 
real wages for a period of nearly thirty years (1890-1918). 

Data were collected for ten industries, seven of them unionized, 
on (a) hourly wages and rates, ( b ) the number of hours constituting 
the established week’s work, and (c) the full-time weekly earnings for 
each of the years from 1890 to 1918. “Full-time” weekly earnings 
are obtained by multiplying the established number of hours per 
week that constitute the standard working week by wages per hour. 
Thus if 50 hours constitute the established week’s work and if the 
hourly wage was 30 cents, then $15.00 would comprise the “full-time” 
weekly earnings. This term therefore does not signify the relative 
amounts of money that the workers actually receive in their weekly 
pay check since it makes no allowance for (1) unemployment, 
(2) underemployment, or (3) overtime. In other words “full-time” 
weekly earnings are based upon the working of the established number 
of hours for the occupation or industry and do not deal with deviations 
from that scale whether they be above or below. The average for the 
ten years, 1890-99, was found for hours, hourly wage-rates, and full¬ 
time weekly earnings for each craft and this was taken as 100. The 
figures for that craft for all other years were expressed in relative 
terms with that average earning as the base. The index for each indus¬ 
try is the simple average of the crafts that compose it and the general 
index number is the unweighted arithmetic average of the industries. 
The price of fifteen food commodities weighted according to their 
importance in the family budgets of workmen was the only continuous 
index of the cost of living and was hence used. The average price of 
these good commodities for the years 1890-99 was taken as 100. 

The following final table summarizes the trend of hours per week, 
wages per week, full-time weekly earnings, and retail food prices. 

1 Adapted from Paul H. Douglas and Frances Lamberson, “The Movement of 
Real Wages, 1890-1918,” American Economic Review , XI (September, 1921), 

409-27. 


3°8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


From the last three of these items the relative purchasing power of 
an hour’s work and a full-time week’s work can be computed. Table 
LV contains all this material. 

TABLE LV 

Index of Real Wages, 1890-1918 
(Average for 1890-99 = 100) 


Year 

Wages per 
Hour 

Full-Time 

Weekly 

Wages 

Retail Food 
Prices 

Purchasing Power 
Measured by Retail 
Prices of Food, of: 

Wages per 
Hour 

Full-Time 

Weekly 

Earnings 

1890. 

99-4 

too. 3 

iot .9 

97-5 

98.4 

1891. 

99-3 

100.1 

103.4 

96.0 

96.8 

1892. 

100.1 

100.9 

101.6 

98.5 

99 3 

1893. 

101.1 

101.4 

104.1 

97 i 

97-5 

1894. 

98.0 

97-9 

99.2 

98.8 

98.7 

1895. 

98.2 

98.3 

97.1 

101.1 

IOI . 2 

1896. 

100.2 

99.9 

95-2 

105.3 

104.6 

1897. 

100.2 

99-7 

96.7 

103.6 

103.2 

1898. 

100.9 

100.2 

99-7 

IOI . 2 

100.5 

1899. 

102.4 

101.1 

100.8 

101.6 

100.3 

1900. 

106.8 

104.6 

103.0 

103.7 

101.6 

1901. 

108.7 

105.9 

108.5 

100.1 

97.6 

1902. 

112.9 

109.0 

114.6 

98.5 

95 -i 

1903. 

117.2 

112.1 

1 14-7 

102.2 

97.6 

1904 . 

118.2 

112.6 

116.2 

101.7 

96.9 

1 905 . 

120.0 

114.4 

116.4 

IO3. I 

98.3 

1906. 

125.1 

118.6 

120.3 

IO3.9 

98.6 

1907 . 

131.2 

123.7 

125-9 

104.2 

98.2 

1908. 

13 1 -6 

123-1 

130.1 

IOI . 2 

94.6 

1909 . 

133-4 

124.4 

137.2 

97.2 

90.7 

1910. 

137.0 

126.5 

144.1 

95-1 

87.8 

1911. 

139.8 

128.9 

i 43 -o 

97.8 

90.1 

1912. 

145-9 

132.6 

154-2 

94.6 

85-9 

1913 ... 

149.6 

135-2 

155-7 

96.1 

86.8 

1914 . 

153 - 1 

137-9 

158.5 

96.5 

87.0 

1915 . 

152.5 

135-5 

156.5 

97-5 

86.6 

1916. 

164.5 

144-8 

177.6 

92.6 

80.8 

1917 . 

167.0 

146.9 

233-4 

71.6 

64.0 

1918. 

211.3 

187.7 

266.6 

79-3 

70.4 


An analysis of this table shows that: 

1. The purchasing power of an hour’s wages was 20.7 per cent less 
in 1918 than it had been during the years 1890-99, and that the pur¬ 
chasing power of full-time weekly earnings was 29.6 per cent less than 
during this period. 

2. This great decrease was concentrated almost wholly in two 
periods: (a) the years 1907-12, (b) the years 1916-17. 

3. During the period 1907-12 wages per hour increased from 131.2 
to 145.9 or 1 i.c per cent, yet from 1913 to 1918 they increased from 
149.6 to 211.3 or 41 per cent. 














































STANDARDS OF LIVING 


309 


4. During the years 1907-12 full-time weekly earnings rose from 
123.7 t° 132.6 or 7 per cent, while in the period 1913-18 they increased 
from 135.2 to 187.7 or 38 per cent. 

5. During the period 1907-12 retail food prices rose from 125.9 
to 154.2 or 22 per cent, while during the years 1913-18 they increased 
from 155.7 to 266.6 or 71 per cent. 

6. In the years 1907-12 the purchasing power of hourly wages as 
measured by retail food prices decreased from 104.2 to 94.6 or 9 per 
cent, while from 1913 to 1918 the decrease was from 96.1 to 79.3 or a 
drop of 17 per cent. 

7. In the years 1907-12 the purchasing power of full-time weekly 
earnings decreased from 98.2 to 85.9 or 13 per cent, while from 1913 
to 1918 they fell from 86.8 to 70.4 or a decrease of 19 per cent. 

8. From 1912 to 1916 money wages not only held their own but 
indeed gained slightly upon prices, but the sudden upward movement 
of prices in 1916 was accompanied by only a slight increase in wage 
rates and the result was that in two years the purchasing power of 
hourly wages declined 27.1 per cent and the purchasing power of full¬ 
time weekly earnings 26 per cent. 

9. Money wages began to gain upon prices in 1918 and in conse¬ 
quence real wages rose in that year over their low-water mark of 1917. 

Certain cautions, however, should be observed in using this ma¬ 
terial : 

1. The industries covered do not include such war-time industries 
as munitions plants. Some of the occupations within these industries 
enjoyed increases in wages more than sufficient to compensate for the 
increase in the cost of living. Household servants are naturally not 
included and they too profited. On the other hand, neither are the 
railroad workers and the coal miners included, and their wages notori¬ 
ously lagged behind the increase in prices. Moreover, the wage 
statistics after 1907 refer chiefly to union workmen. They conse¬ 
quently do not include most of the unskilled workers and, save for the 
years 1917 and 1918, it is extremely probable that the increases for this 
class were not as great as for the union workers who were at once more 
skilled and possessed stronger bargaining powers. 

2. The wage scales used since 1907 for seven of the industries 
were the union scales. Until 1917, and perhaps even until 1918, the 
union scale did actually represent in practice “ the prevailing wage of 
a locality for efficient labor.” In 1918, however, due to the relative 
scarcity of labor, a much larger percentage than usual of the workers 
were paid in excess of this scale. To the extent that this occurred, 


310 THE WORKER IN MODERN ECONOMIC SOCIETY 

the use of the union scale fails to give a completely accurate represen¬ 
tation of actual wage rates. This criticism, of course, does not apply 
to the three industries for which pay-roll data were used. 

3. As has been pointed out, the use of retail food prices exagger¬ 
ates the increase in the cost of living for the years 1916,1917, and 1918. 
The actual decline in real wages for these years was accordingly some¬ 
what less than is shown above. 

4. As has been explained, the relative full-time weekly earnings 
do not represent the relative amounts of money actually received per 
week. If the relative amount of unemployment or under-employ¬ 
ment should decrease, then the relative actual amounts received would 
(to that extent at least) increase. Likewise if the relative amount of 
overtime increased, the relative actual earnings would rise. The 
industrial pressure brought by the war did, beyond doubt, decrease 
unemployment and increase overtime. 

5. It is also probable that, due to the influx of new groups during 
the war years, a great many of whom were relatively untrained, and the 
more rapid promotion of the old workers, the workers covered in the 
latter period were not the same as those covered in the earlier years. 

Two questions may then be asked: (a) Was the increase in employ¬ 
ment per week more than sufficient to offset the loss in hourly wage 
rates? What was the course of actual money earnings per week as 
compared with the cost of living ? (b) Which is the more significant, 

actual earnings or wage rates ? These will now be considered in turn: 

a) Practically the only authoritative material on actual weekly 
wage payments, including both overtime and undertime, is that col¬ 
lected by the industrial commissions of New York and Wisconsin 
and published in their respective labor market bulletins. The former 
covers some 600,000 workmen, while the latter is based upon approxi¬ 
mately 80,000 workmen. In both cases a very narrow base is used 
for computation, the single month of June, 1914, serving in New York 
and the first quarter of 1915 in Wisconsin. Table LVI shows the 
purchasing power of average weekly wage payments in the manufactur¬ 
ing industries of each of these two states in terms of their respective 
bases. 

This table shows that so far as New York state workers were con¬ 
cerned the greater amount of employment was not sufficient to com¬ 
pensate for the decreased purchasing power of an hour’s work. The 
average week’s pay envelope actually purchased 12 and 6 per cent 
less respectively in 1917 and 1918 than in June, 1914, despite the fact 
that the workmen were employed more steadily and worked longer 


STANDARDS OF LIVING 


311 

hours. In Wisconsin, however, there was apparently a fluctuating 
increase in real weekly wages over the base after February, 1918, 
although for a few months preceding this, the index was slightly lower 
than in the period chosen as the base. 

As a matter of fact both the New York and Wisconsin figures give 
a more optimistic picture than is justified. It has already been pointed 
out that both use an exceedingly narrow base—that of New York 
being only one month, while that of Wisconsin is only three months. 

TABLE LVI 

Comparison of Average Weekly Earnings of Factories in New 
York State and Wisconsin with Course of Retail Food 
Prices in the United States 

(For New York, June, 1914=100. For Wisconsin, first quarter, 1915 = 100.) 


Date 


1914 . 

1915 . 

August, 1915.. 

1916 . 

February, 1916 
August, 1916.. 

1917- • . 

February, 1917 
August, 1917.. 

1918 . 

February, 1918 
August, 1918.. 

1919 . 

February, 1919 
August, 1919.. 
February, 1920 
July, 1920. . .. 


Average Weekly 
Earnings 


New York 


98 

101 


114 


129 


160 


185 


224 


Wisconsin 


108 


117 

124 


134 

146 


157 

193 


209 

205 

240 

250 


Retail Food Prices, 
U.S., Twenty-two 
Commodities 


New York 


I°5 

102 


115 


147 


170 

l88 


221 


Wisconsin 


99 


105 
11 2 


132 

148 


l6o 

170 


171 

191 

198 

217 


Purchasing Power 
of Average Weekly 
Earnings in Terms 
of Food 


New York 


93-3 

99.0 

99.1 


87.7 

94.1 

98.4 


101.4 


Wisconsin 


109. I 


III .4 

no. 7 


IOI.5 

98.6 

98. I 
H3-5 

122.2 

107.3 

121.2 

115.2 


What is more, each of the base periods occurred during the depression 
of 1914-15 when there was a large amount of unemployment and short 
time. Had a longer or a more representative period been used as the 
base for both of these studies, the later figures concerning actual 
weekly wages expressed in relatives would have been considerably 
lower. In other words, the workers in New York state lost even more 
than is indicated above, while the workers in Wisconsin gained less 
than is shown and, at least until late in 1918, quite probably did not 
gain at all. 

b) Whether, as a matter of fact, total weekly earnings would give 
a fairer picture of the worker’s status than do hourly wage rates, it is 













































































3 12 


THE WORKER IN MODERN ECONOMIC SOCIETY 


impossible, with our scanty material, to tell. The answer would 
require a knowledge of pre-war and post-war hours worked; and that 
knowledge is not available. It may be worth while, however, to point 
out how such material could be used if we did have it. 

Very roughly, the question of the relative significance of hourly 
rates and weekly earnings depends necessarily upon a somewhat 
complex double factor of judgment; the interrelation not merely of 
previous and present hours worked to previous and present wage rates 
but the relation of all four to some sort of mental standard in the way 
of a “normal” working week. This last criterion is indispensable. 
Suppose a man had previously been employed only twenty hours a 
week and was now enabled to work forty hours. Even though his 
total earnings rose thereby only 50 per cent, would not most critics 
be assured that his new surplus constituted a real human gain and 
would they not hence be forced in this case to consider weekly earn¬ 
ings the significant standard ? Suppose, however, that he had already 
been employed forty hours and was now raised to eighty hours. Would 
this inhumanly long labor be compensated for adequately by a 50 
per cent addition in earnings? Assuredly no. Hence the hourly 
wage would here give the fairer picture. Or again, in the third place, 
suppose the original hours worked were forty and were now raised to 
forty-eight or fifty (an amount typically involving no undue strain) but 
the gain in total earnings was only 2 or 3 per cent. Would that small 
cash gain be worth the extra effort ? Here the issue is not so clear, al¬ 
though most of us would probably hold that the gain was not worth the 
trouble and that once more the hourly rate was the more significant. 
If, on the other hand, the increase from forty hours of labor to fifty 
had entailed an income gain of 12 to 15 per cent, many would think 
the result worth while—and hence again resort to the weekly earnings 
as base. 

It is believed that the qualifications pointed out above with respect 
to other industries, trade-union rates, and retail food prices, would 
not greatly alter the situation as revealed by Table LIV. While 
any estimate may be in the nature of a guess, it is the belief of the 
writers that these factors would not introduce a change in real wages 
in excess of 10 points and probably less. 

All the evidence seems to indicate that at the termination of the 
great war 1 the return in commodities which the American workman 

1 It should be remembered that this investigation stopped with 1918. Further 
research in process at the time of the issuance of this book indicates that there was 
a rigid increase of real wages during 1919 and 1920. 



STANDARDS OF LIVING 


313 


received for an equal length of time worked (one hour) was from 10 
to 20 per cent less than it was in the decade 1890-1899, and from 7 to 
17 per cent less than it was before the sharp upward movement of 
prices in 1916. The purchasing power of the established week’s 
work, moreover, was from 20 to 30 per cent less than in the nineties 
and from 10 to 20 per cent less than in 1915. American labor as a 
whole, therefore, cannot legitimately be charged with having profi¬ 
teered during the war. Rather, like Alice in Wonderland, it was 
compelled to run faster in order to stay in the same place. 

b) RELATIVE REAL YEARLY INCOMES OF WAGE-EARNERS, 

I909-I9I9 1 

The average yearly incomes of wage-earners for the period 1909-19 
was previously quoted in terms of the price level of that year. During 
this time, however, the cost of living increased. The National Bureau 
of Economic Research reduced these to the purchasing power of a 
workman’s dollar in 1913. The following table shows these yearly 
incomes in terms of equal purchasing power for the average of all 
industries. 

TABLE LVII 


Year 

Value in Terms 
of 1913 Prices 

Relative Index 
(1913 = 100) 

1909 . 

$656 

90.7 

1910. 

671 

92.8 

1911. 

659 

91 I 

1912. 

696 

96.3 

1913 . 

723 

100.0 

1914 . 

668 

92.4 

1915 . 

677 

93-6 

1916. 

755 

104.4 

1917 . 

745 

103.0 

1918. 

682 

94-3 


c) labor’s share in the increased productivity of 

INDUSTRY 2 

According to the investigations of Professors E. E. Day, of 
Harvard, and Walter W. Stewart, of Amherst, which agree substan¬ 
tially with each other, the physical productivity of industry, in terms 
of the actual quantity of goods produced, increased rapidly from 1899 

1 Adapted with permission from National Bureau of Economic Research, 
Income in the United States , pp. 102-3. 

2 Adapted with permission from George Soule, “The Productivity Factor in 
Wage Determination,” Supplement American Economic Review (March, 1923), 
pp. 129-40. 




















314 


THE WORKER IN MODERN ECONOMIC SOCIETY 


to 1920. Taking the average production during the years 1909-13 
as a base, or 100, Dr. Day found that the index for the production 
of all commodities in 1899 was 64.6 while by 1920, it was 117. This 
was an increase of about 80 per cent for the 22 years. During this 
time manufacturing production alone increased at a slightly higher 
rate, i.e., from 58.4 to 118.0, or a virtual doubling. The population 
during these years increased from about 75 millions to about 105 
millions, or about 40 per cent. Thus it is clear that total production 
increased about twice as rapidly as the population between 1899 and 
1920 and that manufacturing population increased at a rate even 
slightly higher. If we divide the index of production by an index of 
population, we find that production per capita of the population in¬ 
creased from 84 to 107, or about 28 per cent, and that manu¬ 
facturing production per capita increased from 76 to 105 or about 
39 per cent. 

It is thus clear that the National product increased so much more 
rapidly than the population that each man, woman and child in the 
country might have received from 30 to 40 per cent more goods at 
the end of the period. This means that the real wages of all wage- 
earners might have been increased at a rate of a little less than 2 per 
cent every year, or between 30 and 40 per cent for the period in ques¬ 
tion, while the real incomes of all other persons were being increased 
in like proportion. This includes, of course, incomes classified under 
the heads of land and capital. 

As a matter of fact, what did happen to wages. The most com¬ 
prehensive and satisfactory data from which to calculate the trend 
of wages come from the U.S. Census of Manufactures. Material is 
given to calculate the annual earnings instead of wage rates. An 
index of real wages, made by comparing the census figures with the 
index of retail food prices, shows the following result, if we take 1889 
as the base. 


1889. 

. IOO 

1899. 

. 99 

1904. 

. 99 

1914. 

. 89 

1919. 

. 98 


Thus while per capita production was increasing more than 30 
per cent, real wages first fell 10 per cent and then recovered to a posi¬ 
tion slightly below the levels of 1889 and 1899. It is thus evident 
that wage-earners not only did not receive the same share per capita 







STANDARDS OF LIVING 


3 T 5 


of the increased product year after year, but actually were receiving 
at the end of the period slightly less goods than at the beginning. If 
real wages had increased in direct ratio to the increase in per capita 
production, the index number of real wages in 1919 would have been 
nearer 140 than 98. 

More detailed figures on the course of money wages and on the 
cost of living are available between 1914 and the present. It is well 
to examine them not only to secure an index of real wages for 1920, 
1921, and 1922 but to check up any error that may be involved in 
using the retail food index since 1914, when on account of the disturb¬ 
ance of price relationships incident to the war inflation and deflation, 
food prices fluctuated more widely than other retail prices. 

By combining the statistics of weekly earnings in New York and 
Wisconsin since 1914 and weighting them according to the manufactur¬ 
ing population of each state and then expressing them in terms of the 
relative total cost of living, we have Table LVIII. 

TABLE LVIII 

Index of Real Wages (Cost of Living) for New York 



AND 

Wisconsin 


1914. 

. . . . IOO 

1919. 

. 101.2 

1915. 

. IOI.7 

1920. 

.... no. 1 

1916. 


1921. 

. 114.7 

1917 . 

1918 . 

. 93-5 

. 96.6 

1922. 



This would indicate an increase in real wages of about 17 per cent 
between 1914 and the present year (1922). If we join this new series 
with our former series derived from the Census, however, and reduce 
it to the base of 1889, we find that real wages at present have increased 
only a little over 7 per cent above 1889 or about 5 per cent above 1899. 

Thus, even taking into consideration the recent rise in real wages, 
due chiefly to the more rapid drop of prices than of wage rates since 
1920, we have only a 5 per cent increase in the per capita purchasing 
power of factory wages to compare with a 30 or 40 per cent in per 
capita production in the last twenty-five years. Making the utmost 
possible allowance for error in real wage figures, it is hardly conceiv¬ 
able that this gap would be bridged. 

What became of the augmented production of physical goods 
between 1899 and the present which wage-earners failed to receive? 
The first thought is naturally that they may have gone to other ele- 











316 


THE WORKER IN MODERN ECONOMIC SOCIETY 


ments engaged in manufacturing. The Census figures however seem 
to prove that this is not the case. Wages in 1919 formed the same 
percentage of the total value added by manufacture, as in 1899, 
salaries comprised 4 per cent more of the total and the balance 4 per 
cent less. 

My first suggestion was that the later products were absorbed by 
those engaged in the distributing process and by the overhead trades. 
This inference is made reasonable by the fact that retail prices before 
the war seem to have risen more than wholesale prices. Between 
1899 and 1914 for instance retail prices of food increased 50 per cent, 
while wholesale prices of food increased only 37 per cent. The same 
inference is indicated by the rapidly increasing percentage of the 
population engaged in trade and finance, the numbers of such occupa¬ 
tions having grown from 6.4 per cent of the gainfully employed in 
1890 to 10.2 per cent in 1920. The evidence is inadequate and although 
it seems probable that the merchants, bankers, advertising men, and 
the like have in part been responsible for absorbing the addition to the 
national income lost by those engaged in manufacture, they could 
hardly have absorbed all of it. 

Dr. W. I. King has prepared data which appear to show that the 
bulk of the increase in production went to those dependent on agri¬ 
culture for their livelihood. On the basis of his estimates, he finds 
that the share of the total income of the United States going to 
those thus engaged in agriculture fell a little and then increased slightly 
from about 13 per cent in 1889 and 14 per cent in 1899 to about 20 
per cent in 1919. At the same time the percentage which the agricul¬ 
turalists formed of the total gainfully employed decreased from 39 
per cent in 1890 and 36 per cent in 1900 to 26 per cent in 1920. From 
these figures, it is difficult to avoid the conclusion that the per capita 
real income of those engaged in agriculture rose so rapidly between 
1899 and 1919 as to absorb most of the increment to national produc¬ 
tion which, as we have seen, was not shared by factory workers. 

It would be improper to infer from these figures that the increase 
in the average per capita agricultural income was wholly reflected 
in the prosperity of actual working farmers. If we bear in mind the 
enormous increases in the value of good farming land, and the large 
number of tenant farmers and farm mortgages, we must conclude that 
a great part of this new income did not bring full benefit to actual 
tillers of the soil. 


STANDARDS OF LIVING 


317 


11. SOME EFFECTS OF LOW WAGES 1 

Rowntree, in his classic investigation of York, England, divided 
the city into three working-class sections: the poorest, where 69 per 
cent of the people lived in either primary or secondary poverty; the 
middle section, where 37 per cent were in poverty; and the highest 
section of the working-class population where there were no “poor.” 
The death-rate for the poorest section was 27.8 per year for every 
1,000 persons; in the middle section it was 20.7; and in the highest 
13.5. The death-rate was therefore over twice as high among the 
poor as among those workmen who were most comfortably situated. 
This higher death-rate among the poor was of course accompanied by 
a higher rate of illness and by a much lower standard of health. The 
infant mortality of children during their first year was also measured. 
Two hundred and forty-seven out of every 1,000 children born in the 
poorest district died within a year after birth, as compared with 184 
and 173 of every 1,000 children born in the middle and highest sections. 
Rowntree found that in those families of York who kept servants the 
infant mortality rate was only 94 per 1,000. 

The heights and weights of schoolboys in the three working-class 
sections were also taken. Boys of three and four in the poorest dis¬ 
trict averaged 3 inches less in height than those in the highest section. 
By the time they left school at thirteen, they averaged 3! inches less. 
Weight is perhaps a still better test. Boys of three and four in the 
poorest district averaged only 33 pounds in weight while those in the 
highest working-class section averaged 37I pounds. By the time 
they left school at the age of thirteen, the first group of boys averaged 
73 pounds in weight while those of the highest neighborhood averaged 
84! pounds. The boys of the poorest families therefore averaged 11 
pounds less than those of the upper-grade of workers. Had a com¬ 
parison been made with the children of the servant-keeping class the 
difference would have been even more striking. The general physical 
condition of the children was also estimated by a trained investigator 
as the children were measured and weighed. Only 17 per cent of 
those from the poorest section were found to be in good condition as 
compared with 27 per cent of those from the middle district and 61 
per cent of those from the highest. On the other hand, 52 per cent 
of the children from the poorest families were found to be in distinctly 
bad physical shape, in contrast to 19 per cent among those of the 
middle group and 11 per cent among the highest section. 

1 Prepared. 


318 THE WORKER IN MODERN ECONOMIC SOCIETY 


A significant study of the relation between low wages and sickness 
was made in 1916 by the United States Public Health Service in seven 
South Carolina cotton mill villages. 1 They found the cases of dis¬ 
abling sickness and the rate per 1,000 persons to be as follows in the 
different income groups, 1 

These cases of sickness were only those which were so severe as to 
prevent a person from working or carrying on their activities. The 
community sickness surveys of the Metropolitan Life Insurance cover¬ 
ing some 580,000 persons, in a number of localities, showed an average 
of 19 per 1,000. The average for these villages was, therefore, nearly 
two and a half times as great as this and only those families whose 
monthly income exceeded $20 per adult male had as low an average 

TABLE LIX 


Family Income 

Number of 

Sick Persons (Disabled) 

Half-Month per Adult Male 

Yearly Basis 
per Family 
of Five 

Persons 

Considered 

Number 

Rate per 1,000 
Persons 
Considered 

Less than $6. 

$460 

D 3 I 2 

1,038 

92 

70.I 

$ 6 -$ 7.99 . 

$46o-$6i5 

SO 

48.2 

$ 8 -$ 9-99 . 

$6i5-$765 

784 

27 

34-4 

$10 and over. 

Over $765 

1,027 

19 

18.5 

All incomes. 


4,161 

• 

M 

00 

00 

45-2 


as that found by the Metropolitan. The illness rate amongst the 
lowest income pays was nearly four times that of those working-class 
families who were most comfortably situated. 

The studies made by the United States Childrens Bureau, before 
our entrance into the war, of infant mortality in various cities also 
give valuable evidence on the relationship between family income and 
the death rate of children. Table LX on the opposite page gives 
the summary for seven cities. 2 

In the light of living costs for that period, the families receiving 
less than $550 a year from the earnings of the father may with justice 
be regarded as living in poverty. Children of poor parents therefore 
had a death-rate which was from two to nearly seven times as great 

1 See Sydenstricker, Wheeler, "and Goldberger, U.S. Public Health Repot ts, 
1918 , XXXIII, No. 47, 2038-51. 

3 See the admirable summary by Julia C. Lathrop, former chief of the Childrens 
Bureau, “Income and Infant Mortality,” American Journal of Health (April, 1919), 
pp. 270-74. 

























STANDARDS OF LIVING 


319 


as those of families in more comfortable circumstances. The families 
with low incomes were compelled to occupy low-rent housing quarters, 
frequently without bathtubs and often placed on the rear of a lot or 
fronting on an alley. Infant mortality was highest where these unfa¬ 
vorable housing conditions prevailed and where room overcrowding 
existed. 

Infant mortality was also much higher among the children of 
wage-earning mothers than among those whose mothers were not 
gainfully employed, the rates in Johnstown, Pennsylvania, being 188 
and 118 respectively and in Manchester, New Hampshire, 313 and 
122. The mothers were generally employed in those families where the 
income of the father was low. 

TABLE LX 

Infant Mortality Rates by Father’s Earnings 


City 

Deaths of Infants under One Year of Age 
per 1,000 Live Births, by Specified 
Annual Earnings of Father 

All Earnings 

$1,250 and Over 

Under $550 

Johnstown. 

130.7 

87.6 

260.9 

Manchester. 

165.0 

58.3 

204.2 

Saginaw. 

84 • 6 

22.2 

142.O 

New Bedford. 

130-3 

59-9 

168.7 

Waterbury. 

122.7 

68.4 

I 5 I-I 

Akron. 

85.7 

40.0 

H 7-5 

Baltimore. 

103-5 

64.7 

138.0 

All cities. 

hi . 2 

64-3 

i 5 i -4 


PROBLEMS 

1. “A standard of living is the cost of producing children.” What is the 
meaning of this statement and to what extent is it true ? 

2. A minister during the war remarked that the class of people who were 
buying silk stockings and silk shirts were not the class who should buy 
them. What did he mean? Is it more proper for any one class to 
purchase silk clothes than for another? 

3. How can we determine scientifically the basic minimum necessary to 
support physical existence ? How may the amount of food needed be 
ascertained and what is it; the amount of clothing; housing; inci¬ 
dentals ? 

4. The Chinese can subsist on a few handfuls of rice and generally not more 
than one meal a day. Could not Englishmen and Americans maintain 
themselves on this? Why or why not? 























3 2 ° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


5. Compare Rowntree’s standard with those of Chapin and Beyer. If 
you were an arbitrator in a wage case involving unskilled labor exclu¬ 
sively, which standard would you adopt as a basis of fixing wages and 
why ? 

6. Define or describe the poverty level, the minimum of subsistence level, 
the minimum of health and decency, and the minimum comfort stand¬ 
ards. To what extent would the physical content of such standards 
vary in the country from that in the larger cities? 

7. “Family budgets, as a measure of the sufficiency of wages paid, were 
not repudiated by employers because they refused to pay a living wage. 
On the contrary, every wage arbitration of any importance brought out 
the assertion by the employers that they believed in a living wage and 
intended to pay at least a living wage. They denied, however, that 
this could be measured by theoretical budgets for theoretical families 
and insisted that the only fair measure of the sufficiency of wages was 
the prevailing standard of living in their own community among their 
own operatives” (National Industrial Conference Board, 1921). Com¬ 
ment. 

8. “Nowadays very few persons object to the principles of a living wage. 
But too often we have been disposed to confuse a living wage with the 
minimum for which a worker can be hired, forgetting that the worker 
is often forced by economic necessity to accept whatever wage is offered 
him quite regardless of its adequacy. When we speak of a living wage, 
we must have in mind a certain standard of living in terms of actual 
goods and services that such a wage is to make possible” (Philadelphia 
Bureau of Municipal Research 1919). Comment, and compare with 
the statement of the National Industrial Conference Board. 

9. Compute the probable approximate amount that it would have cost a 
family consisting of a husband aged forty-five, a wife of forty, a depend¬ 
ent mother of seventy, and four children, namely two boys of twelve 
and ten respectively, and two girls aged six and four, to live on a mini¬ 
mum of subsistence basis in West Hoboken, New Jersey, at the begin¬ 
ning of 1920; at the end of 1922 ? Explain the steps in your compu¬ 
tation and comment upon them. How much would it have cost this 
family at each of these periods had it had only one child, a boy of twelve, 
and no dependent mother? Work this through on the basis of both 
types of families for other cities on a subsistence plus and on a mini m um 
of comfort standard of living. . 

10. Compare the distribution of wealth in France, England, Germany, Wis¬ 
consin, and Massachusetts. Account for the similarities and differences 
in the figures. 

11. Does such evidence as we have indicate that the concentration of wealth 
has been increasing in the more thickly settled regions of the United 
States during the last half-century ? How do you account for the results 


STANDARDS OF LIVING 


3 21 


shown ? Do you regard such figures as typical of the country as a whole ? 
Why or why not ? 

12. Analyze the statistics concerning the distribution of income in this 
country. Compare them with (a) the probable distribution of income 
in Great Britain and (6) the probable distribution of wealth in the United 
States. 

13. What is the difference between wealth and income ? Which is more 
important as regards ( a ) purchasing power, ( b ) security, (c) power? 

14. What is the effect, if any, and why, of our present distribution of wealth 
and income upon: (1) the demand for Rolls-Royce automobiles as con¬ 
trasted with that for Fords; (2) the construction of exclusive country 
estates as compared with excursion trips for the children of the cities; 
(3) the relative supply of men eligible for bank presidencies and for 
common labor; (4) the social and economic teachings of our newspapers; 
(5) the economic theory of the period; (6) the political policies advocated 
and carried out by the political parties; (7) envy on the part of the poor 
and distrust upon the part of the rich; (8) the labor movement. Be 
specific and give full reasons for your position. What would be some 
of the probable effects of a more equal division of wealth and income ? 

15. It is sometimes said that if the income of the country were evenly 
divided, all would live in luxury. To what extent is this true ? Should 
all the income be consumed ? What effect would the amount of nec¬ 
essary saving have upon the amount that could be consumed ? 

16. It is frequently asserted that since labor in manufacturing industries 
receives only 16 per cent of the total value of manufactured products 
that it therefore receives only 16 per cent of the total value product 
of industry. Is this correct ? Why or why not ? 

17. What percentage does labor seem to secure of the total value product 
of industry ? How do you account for the relative constancy of this 
sum ? How account for such variations as have occurred from year to 
year ? To what extent is it probably possible permanently to increase 
the relative share of labor under the existing structure of society; of 
capital ? Work out your position in detail. 

18. “In determining whether wages are adequate in terms of a given stand¬ 
ard of living, one should take the total family income as the basis for 
comparison and not the earnings of the head of the family.” Evaluate 
this statement. 

19. From the wage statistics given for the period prior to 1914, what 
percentage of the workers’ families would you estimate were living in 
poverty ? Describe the steps in your reasoning and the data upon which 
it is based. What qualifications should be made to this estimate and 
how important do you deem these to be and why ? 

20. “Labor has prospered mightily; whereas workmen thought themselves 
lucky in the early 90’s to get $1.50 or $2.00 a day, now many get $5 or 


3 22 


THE WORKER IN MODERN ECONOMIC SOCIETY 


$6 a day and yet they still demand more. They should be satisfied 
with their gains.” Criticize. 

21. “The workers lived in great comfort, and even in luxury during the 
war.” Evaluate this statement in the light of the investigation by the 
United States Bureau of Labor Statistics and the study of real wages by 
Douglas and Lamberson. Discuss in detail. 

22. Define the following and distinguish between each: (i) hourly rates, 
(2) hourly earnings, (3) actual weekly earnings, (4) “full-time” weekly 
earnings, (5) yearly earnings, (6) yearly family income. Which is the 
most reliable index of the purchasing power of the worker; of his share 
in the value product of industry? 

23. If the purchasing power of an hour’s work went down 10 per cent over 
a period of years, yet because of the fact that the wage-earners were 
employed for 15 per cent more hours, their real annual income increased, 
can they be said to have improved their condition ? Discuss in detail. 

24. How do you account for the decline in the purchasing power of an hour’s 
work in 1916 and 1917? Is there any relationship between this and 
the movement of strikes during these years and if so, what ? Would 
you expect that the purchasing power of an hour’s work increased in 
1919 and 1920? Why? 

25. Discuss the relative accuracy of food as an index of the cost of living? 
Why did not Douglas and Lamberson in their investigation of the move¬ 
ment of real wages use indices for the total cost of living ? 

26. To what extent has labor shared in the increased productivity of indus¬ 
try ? How do you account for the apparent distribution of this increased 
production? To what extent does it corroborate the views of the 
Marxian socialists; of the single taxers? Why? 

2 7. Should the wages of labor increase equally with the increase in produc¬ 
tion ? To what degree is labor entitled to share in the increase due to 
(a) accumulation of capital, ( b ) inventions, (c) better business methods, 
(d) discovery of more fertile soil, and why? To what degree and in 
what manner do you think these tendencies work themselves out ? 

2 8. On what grounds is it contended that every adult male worker should 
receive enough to support a family of five and to what extent are they 
valid? 

29. From the standpoint of need should a bachelor receive as much as the 
head of a family of five or six ? Is there any method of paying those 
who have dependents a higher minimum than those who have none 
which will not injure the chances of those with dependents of being 
employed ? Work out in detail and discuss some of the further problems 
that would be created: 


STANDARDS OF LIVING 


323 


REFERENCES FOR FURTHER READING 

Beyer, Davis, and Thwing, Workingmen’s Standard of Living in Philadelphia 
Booth, Charles, Life and Lobour of the People of London 
Bowley, A. L., The Division of the Product of Industry 

-, The Change in the Distribution of the National Income in the United 

Kingdom , 1880-1913 

-, Prices and Wages in the United Kingdom 1914-1920 

Bureau of Applied Economics, Standards of Living. 

Chapin, R. C., Workingman’s Standard of Living in New York City 
Douglas and Lamberson, “The Movement of Real Wages, 1890-1918,” 
American Economic Review , XI (September, 1922), 409-27. 

Hansen, Alvin H., “The Buying Power of Labor During the War,” Journal 
of the American Statistical Association , March, 1922, pp. 56-66 
King, W. I., The Wealth and Income of the People of the United States. 
Mitchell, King, Knauth and Macauley, Income in the United States. 2 vols. 
(especially Vol. 1) 

National Industrial Conference Board. Research Report No. 41 
Nearing, Scott, Wages in the United States 
New York State Department of Labor 
Wisconsin Department of Labor 
Rowntree, B. S., Poverty 

-, The Human Needs of Labour 

United States Bureau of Labor Statistics. Bulletin 265. Industrial Survey 
in Selected Industries. 


See also the Wages and Hours Series of the U.S. Bureau of Labor 
Statistics and the issues of the Monthly Labor Bureau. 


jLabor Market Bulletins 






CHAPTER X 

WOMEN’S WORK AND WAGES 


i. THE NUMBER AND DISTRIBUTION OF WOMEN 
GAINFULLY EMPLOYED IN 1920 1 

How many women are at work in the United States ? What do 
they do? Has their number increased or decreased during the last 
few years? The replies to many of these questions are to be found 
in several bulletins on occupation statistics recently issued by the 
Federal Bureau of the Census. 

During the past few years, every time a woman invaded an occu¬ 
pation hallowed for generations as a pursuit for men only, attention 
was called to the fact by the woman’s coworkers and in some cases by 
the press. The publicity given these changes in the occupational 
status of women caused the public to believe that a large and increasing 
proportion of women were seeking employment outside the home. 
When a woman dropped out of domestic service or gave up dress¬ 
making to work in a munition factory or to become a street-car con¬ 
ductor, the entire community heard of her new employment, but no 
one mentally subtracted her from the ranks of those in her former* 
occupation; and so the impression gained ground that vast numbers 
of women were taking up gainful occupations for the first time. 

This impression is not upheld, however, by census statistics. In 
continental United States 8,549,511 women 10 years of age and over 
were gainfully occupied on January 1, 1920. This number represents 
an actual increase since 1910 of nearly half a million; but if the increase 
in population be taken into consideration, the proportion of all women 
10 years of age and over gainfully occupied decreased from 23.4 per 
cent in 1910 to 21.1 per cent in 1920. 

On the whole, the great change seems to have been in a decrease 
among women working in or for the home and in personal-service 
occupations, and a corresponding increase in clerical and allied occu¬ 
pations, in teaching, and in nursing, all of which have been women- 
employing occupations for many decades but have not before reached 
such numerical importance. 

Contrary to general impression, women seem not to have gone into 
absolutely new occupations to any great extent. They had, however, 

1 Taken from U.S. Women’s Bureau, Bulletin No. 27, pp. 1-4, 8. 

3 2 4 


WOMEN’S WORK AND WAGES 


3 2 5 


enlarged their field of work by entering in greater numbers occupations 
in which formerly they had but scant representation. 

TABLE LXI 


Number and Proportion of All Women Ten Years of Age and Over 
Engaged in Each General Division of Occupations, 

1920 and 1910* 



1920 

1910 

General Division of Occupations 

Number of 
Women 

Percentage 
of Women 

10 Years of 
Age and Over 

Number of 
Women 

Percentage 
of Women 

10 Years of 
Age and Over 

Population 10 years of age and 
over. 

40 , 449,346 

IOO. O 

34 , 552,712 

100.0 

All occupations. 

8 , 549,511 

21.1 

8,075,772 

23-4 

Agriculture, forestry and ani¬ 
mal husbandry. 

1,084,128 

2 . 7 f 

1,807,501 

5 - 21 

Non-agricultural occupations: 

7,465,383 

18.5 

6,268,271 

18.1 

Extraction of minerals. 

Manufacturing and me¬ 
chanical industries. 

2,864 

1,930,341 

4-8 

1,094 

1,820,570 

5-3 

Transportation. 

213,054 

667,792 

•5 

106,625 

•3 

Trade. 

i -7 

468,088 

1.4 

Public service (not else¬ 
where classified). 

21,794 

. 1 

13,558 

t 

Professional service. 

1,016,498 

2-5 

733,89! 

2.1 

Domestic and personal ser¬ 
vice. 

2,186,924 

5-4 

2,531,221 

7-3 

Clerical occupations. 

1,426,116 

3-5 

593,224 

1-7 


* The decrease during the decade 1910 to 1920 in the proportion of all women 10 years of age 
and over who were gainfully occupied is to some extent apparent only and may probably be attributed 
to three main causes: x. The change in the census date from April 15 in 1910 to January 1 in 1920— 
from a very busy farming season to a time of the year when all farming activities are at their lowest 
ebb. This change in date probably resulted in a great reduction in the number of women returned in 
agriculture, forestry, and animal husbandry, though the returns for men apparently were to a less 
extent affected by the same circumstance. 2 An overstatement in 1910 of the number of women 
engaged in agriculture. The Census Bureau in 1910 estimates this overstatement at almost half a 
million. 3 A great decrease in the employment of girls 10 to 15 years of age. 


2. WOMEN’S WAGES IN THE UNITED STATES 1 

After noting a fairly general agreement that “living wages” for 
women under American conditions would be more than $8.00 per week 
in 1914 and that $7.00 represents about the level of a bare existence, 
Persons summarized the results of investigations of women’s wages 
prior to 1915 as follows: There is available a wealth of data which 
serves to reenforce the conclusion that of women at work i.e. those 16 
years of age and over, outside the homes and professions, almost half 

1 Adapted with permission from an article by C. E. Persons in the Quarterly 
Journal of Economics , XXIX (1915), 201-34. 






























32 6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


earn less than $6.00 in a representative week; and approximately 
three-fourths less than $8.00. 

Aside from the loss caused by unemployment, the earnings of 
women fall below the level approved by wage commissions for various 
reasons. Of considerable importance is the fact of the immobility 
of the female labor force. Women are less independent, less able to 
move than are men. The husband and father is the chief wage earner, 
and other members of the family perforce accompany him to his most 
advantageous location. Men flow naturally to any point offering 
opportunities for labor. It seems more natural for the employers of 
women to take his plant to the labor force. This interference of family 
ties with the mobility of woman wage earners results in congestion 
and consequent low wages in certain localities or even in sections of 
particular localities. This would seem the true reason for the lack of 
standardization in women’s wage noted by certain investigations. 
Ten cents a day for carfare may easily negative search for employment 
beyond walking range if the weekly wage be very low. This factor, 
however, is of local importance only. However much it may oppress 
the individual worker or whatever its effects in dictating the location 
of women employing industries, it does not affect the general wage level. 

Age and wage .—Of prime importance in determining the low wage 
of women workers is the question of age. Youth and low earning 
capacity are found together. The numbers reported in the cotton 
industry in the age groups are highly suggestive. In New England the 
years 16 to 20 inclusive include almost a third of the women reports; 
in southern mills, almost half. Similarly in the men’s clothing 
industry, full earning capacity is reached at 21, and maintained to 45 
years of age. About 35 per cent of those within these ages earned 
more than $8.00 per week, while of those 16 and 17 only one-ninth 
earned so much, and of those 18 to 20 only one-fourth. It is then 
highly significant that more than half of the 10,700 workers covered 
were under 21 years of age. 

Combination of the statistics of twelve important industries 
reported by the Bureau of Labor gives the results in Table LXII 

(p- 327)- 

The combined results thus secured are similar to those in the cotton 
and men’s clothing industries. Full earning capacity is not reached 
before 21 years of age. Yet you note that there were more workers 
aged 16 to 17 reported than from 21 to 24; and more aged 18 to 20 
than for all ages 25 and over. This is the combined result of twelve 
important industries. 


WOMEN’S WORK AND WAGES 


3 2 7 


Available data, then, suggest that of all women at work in America 
in manufacture and trade almost one-fourth are from 16 to 20 years 
of age. Of this fourth probably half earn under $6.00 per week, and 
80 per cent under $8.00. Another fourth are from 21 to 25 years of 
age. Of these one-third earn under $6.00, and from 60 to 70 per cent 
under $8.00. The smaller numbers of more advanced ages employed 
do not receive higher average wages. It is an evil combination that 
is found here; lack of skill, training, and experience, joined with the 
irresponsibility of youth, and great congestion in the labor market. 
The recurring statement in the bureau report is that the demand on 
these female workers is for dexterity and speed. These qualities are 
possessed in youth and are offered in abundance. Skill and training 
these workers neither have nor attempt to acquire. For their work- 

TABLE LXII 


Ages and Wage Groups in Twelve Selected Industries 


Age 

Number 

Percentage 
Under $4.00 

Percentage 
Under $6.00 

Percentage 
Under $8.00 

Percentage 
Over $8.00 

16-17. 

9,918 

28.4 

59 0 

91-5 

8.4 

18-20. 

13,769 

19.2 

57 -i 

79-9 

20. I 

1 

W 

8,617 

IO. I 

35-3 

69.1 

30-9 

25 and over. 

11,904 

12.6 

36.8 

66.1 

33-9 


ing life is to be short and they are forced by economic pressure to seek 
the highest present earnings. They have followed their work from 
the home to the factory. Through marriage they intend to make good 
their retreat to the home. This expectation is realized; for omitting 
the negro women, less than 4 per cent of married women are returned 
as breadwinners. The higher earnings reported for women, then, are 
received by comparatively few, those remain in the shops after the 
great mass of their fellow workers have left. Their gain in experience 
and skill accounts for part of the gain in wages; increased seriousness 
and steadiness for more. They earn more. But the evidence shows 
little progress after 21, and less after 45. Here, then, is a worthy 
suggestion for another line of attack upon the low wages of women 
aside from minimum wage laws. Every rise in the age limit for enter¬ 
ing employment; every agency for better training; every influence 
lengthening the period in home and school exerts a more proportionate 
influence on wages. For it attacks the problem at the point of great¬ 
est intensity. It relieves the extreme pressure of over-competition 
in the labor market exerted by those having only docility, deftness, 




















3 2 8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


and speed to offer. It alleviates the self-exploitation of these over 
eager sellers of the qualities of youth. 

Race .—Of scarcely less importance than the question of age is that 
of race. Consider first, evidence from the cotton industry correlating 
age, race, and wages. The basis of comparison followed here is hourly 
earnings. This avoids the disturbing effects of fluctuations in employ¬ 
ment. The report covers over 8,000 female workers in Massachusetts 
cotton mills. It indicates a strong massing in the years 16 to 24 
inclusive, nearly half of the female workers being of those ages. 

The most significant fact in the table is that the Americans and 
each of the races of older immigration have maximum earnings in 
excess of those for all workers and in general attain their maximum 
efficiency as late or later. On the other hand, the races of newer 
immigration have lower maximum earnings and in general attain their 
highest efficiency in a much earlier age period. 

Similar evidence is drawn from the men’s clothing industry. 
Further evidence of the relation of race to the question of wages and 
more particularly of the relation of recent immigration to the question 
of low wages for women workers all lends support to the general con¬ 
clusion that among the youthful and ill paid female wage earners, the 
immigrant women are the worst paid of all. What happens is that 
these women, lacking knowledge of American conditions, of the lan¬ 
guage and of the condition of the labor market, without specialized 
skill, training or aptitude, with the lowest standards of living, and 
driven by the severest economic pressure, snatch eagerly at any oppor¬ 
tunity for employment and any wage which may offer. 

To these disabilities they add that of extreme youth. The Census 
of 1900 shows that nearly 50 per cent of all foreign born women aged 
15 to 24 years were at work. The corresponding figures for the native 
born white classes are 20. One per cent for those of native parentage, 
and 37.5 per cent for those of foreign parentage. All these handicaps 
can only be overcome by accepting lower wages and harder conditions 
of employment. The ready acceptance of both conditions by recent 
immigrants has earned for them the ill will of their fellow workers, and 
has often resulted in discriminations against them by employers. 

It is well known that these foreign born women are for the most 
part, not independent workers, but members of families. They live 
at home and the great majority of them turn their earnings into the 
family treasury. The youthfulness of women at work would suggest 
that this was the typical situation of all nativity groups. Such a 


WOMEN’S WORK AND WAGES 


3 2 9 


situation would have large influence on the wage situation. An 
answer to the question, what proportion of working women live at 
home, is found in the Bureau of Labor’s investigation of stores and 
factories. This shows that 77 per cent of over 2,000 women in stores, 
and 82 per cent of over 5,000 women in factories live at home. 

Are women workers members of families with other breadwinners. 
—Of importance also is the number of breadwinners found in the 
families of which these workers were a part. Of the 905,000 women 
included in the 1900 Census study of the family relationships of work¬ 
ing women, 70 per cent were living in families in which there were 
other breadwinners. Considering only the single women, 73.6 per 
cent were living in families with other wage earners present. The 
percentage rises to 82.7 per cent for single workers of foreign parentage, 
and is 66.8 per cent for those of foreign birth. Of the 678,000 single 
women included, 19.1 per cent are boarding and but 6.5 per cent of 
those in homes are in families in which there is no other wage earner. 
It may be added in regard to the 19 per cent boarding, that it by no 
means necessarily follows that they are all dependent entirely on their 
own resources. 

Investigation of the expenditure of earnings disposes effectively 
of the importance of the “pin money” worker as a determining factor 
in wages. Recent reports are a unit in declaring that such workers 
are the rate exception; too few to seriously affect the general situation. 
Further, the investigations show conclusively that the larger part of 
the earnings of women living at home is turned into the family treas¬ 
ury. Thus in the Massachusetts report it is stated that 78.5 per cent 
of the candy workers gave all they earned to the family; 20.3 per cent 
gave part. Among store workers, where the result is not affected by 
the presence in large numbers of foreign workers, 61.8 per cent gave 
all, 39.4 per cent gave a part. It is noted that the age runs higher 
among these workers. The laundry workers make a similar showing; 
60 per cent contribute all their earnings; 39.1 per cent a part. Figures 
for the glass industry allow a nativity comparison. It is shown that 
227 children, 16 years of age and over, contribute 86.4 per cent of their 
earnings to the family. The native born whites of native parentage 
gave 81 per cent; those of foreign parentage 85 per cent and the 
foreign born over 90 per cent. In the case of races of the newer immi¬ 
gration practically all the wage goes to the family treasury. Particu¬ 
larly in the case of the Slavs and Italians, it is declared “a social 
custom for the mother of the household to act as treasurer and to 


330 


THE WORKER IN MODERN ECONOMIC SOCIETY 


receive the earnings of the working members.” Some part of the wage 
may occasionally be returned to the older children. 

The 11 pin money” fallacy. —It boots little to multiply illustrations, 
for the conclusion reiterated and enforced by the unanimous declara¬ 
tions of the investigation of many industries and localities of the 
various nativity groups and races, and at all ages, is that the typical 
female workers are the 80 per cent living at home and contributing 
the larger part of their earnings to the family treasury. The “pin 
money” worker is proven a false, if not a “vicious” theory. Twenty 
per cent of the girls at most are independent workers. The remainder 
—a proportion great enough to be controlling—are constituent 
parts of a closely knit family group. The pains of their labor are 
reckoned in the sacrifices of the family; their earnings merge in 
the family income. Though the effect of this condition has been 
well enough understood by the employers, it has been misinterpreted 
on the basis of the “pin money” theory. It has not been recognized, 
or at least not accepted, in the current minimum wage reasoning. 
There, it has been postulated that the female worker is, or at least 
ought to be, an independent worker entitled to sufficient wages 
for full self-support. Any industry paying less is forthwith termed 
parasitic. However desirable this may be from an ideal stand¬ 
point, the actual situation is otherwise. The true social unit here is 
the family. It has a certain potential labor supply. Its members 
have certain desires for leisure, for education, for the various goods 
that make up income. They escape the pains of labor when possible, 
saving their necessary or strongly desired income. Normally, in the 
long run, workers cannot be secured for less than an income sufficient 
for full support at the established standard, including allowances for 
support in the period of youth and old age, for training and for the 
replacement fund. But temporarily the wage may fall in evil times 
to the minimum sufficient for the scantiest supply of food. The satis¬ 
faction of all other wants is deferred to a more favorable season. It 
is better to labor for the pittance than to starve. In the family a 
similar situation exists. The father’s wage is insufficient for the fam¬ 
ily needs at the customary standard. If the daughters were independ¬ 
ent units in the labor supply and if there was no pressure of economic 
necessity, the wage offered must be as large as full support for the 
present and past years would request. But since the family must main¬ 
tain all its members in any case, it takes stock of its available labor and 


WOMEN’S WORK AND WAGES 


331 


sells at the market rate. As in the case of railroad transportation, the 
price may fall in the worst case near to the extra cost involved in per¬ 
forming the extra service. In this case this service is represented by 
the labor performed by the daughter. The family foregoes the pay¬ 
ment for the period of youth and training. There is nothing to set 
aside for old age. Recreation is foregone; education neglected. The 
wage may be less than the necessary cost of the daughter’s support 
But that support is a part of the irreducible “fixed charges” of the 
family treasury, and if the labor of the child will yield any contribution 
to the hard pressed exchequer of the family, it is accounted worth 
while—even necessary. This is quite as true and quite as well justi¬ 
fied by the logic of the situation as the cut rate offered by the traffic 
manager of the bankrupt railroad. 

It is this bankrupt condition of the working families that dictates 
the entrance of youthful female workers into industry. It is severer 
pressure met by lower economic strength that causes an increase of 
the percentage of females, 16 to 20 years of age and at work, from 
20.8 per cent for the native born of native parentage to 40 per cent for 
those of foreign parentage and to 56.8 per cent for those of foreign 
birth. Wages are low for women at work primarily because with the 
increasing pressure of population, and the influx of families bringing 
low standards of living joined with scant industrial efficiency, it 
becomes necessary for more members of the family to bear a portion 
of the family’s labor sacrifices and this through a longer term of years. 
The inevitable result is severe competition among these workers of 
lowest standards, least skill and efficiency, and consequent low wages. 
Thus dictated by necessity, it is justified by results in the economics 
of the individual families. It is unjustifiable only from the larger 
viewpoint of its effect on the character of the national citizenship. It 
is from this viewpoint that it is attacked with the weapon of minimum 
wage laws, and rightly so. But there is certain loss involved in mis¬ 
interpretation of the character of the position attacked. One error 
of the forces backing this legislation lies in regarding each female 
worker as an independent labor unit. Instead the true labor unit is 
the family. Despite the change following the industrial revolution, 
solidarity and cooperation in the bearing of labor sacrifices are still 
the typical condition there. The wage of the working woman 
can only be understood when the interpretation is made on that 
basis. 


332 


THE WORKER IN MODERN ECONOMIC SOCIETY 


3. WOMEN’S WAGES SINCE THE WAR 
a) women’s wages and hours of labor in the country as a 

WHOLE IN 1919 1 

This survey was conducted during the period September, 1918— 
June, 1919, in twenty-eight industries, located in forty-three states, 
and covered plants employing 404,758 wage-earners, both men and 
women. Approximately 95 per cent of the schedules were for periods 
from December, 1918, to May, 1919, inclusive. The survey in the 
main, therefore, covers the post-armistice period. The material col¬ 
lected concerning the number of hours actually worked and the earn¬ 
ings per hour is classified in respect to {a) industry, (b) sex, (c) state. 

The following table perhaps, summarizes the general results more 
concisely than those of the Bureau. 


TABLE LXIII 

Hours Worked per Week and Earnings per Hour of 

Female Employees 


Hours Worked per Week 

Earnings per Hour 

Number of 
Hours Worked 
per Week 

Number of 
Employees 

Percentage 

Cumula - 
tive 

Percentage 

Earnings per 
Hour in Cents 

Number of 
Employees 

Percentage 

Cumula¬ 

tive 

Percentage 

Under 24... 

4,284 

5 

5 

Under 16. 

4,384 

5 

5 

24-30. 

2,775 

3 

8 

16-20.... 

9044 

11 

16 

30-36. 

4,829 

6 

14 

20-25- 

I 7 D 43 

20 

36 

36-42. 

9,943 

12 

26 

25-30.••• 

17,246 

20 

56 

42-48. 

20,261 

24 

50 

30-40- 

23,455 

27 

83 

48-54 . 

31,805 

36 

87 

40-50- 

9,846 

11 

94 

54 - 6 o. 

11,187 

12 

99 

50-60.... 

3 D 76 

4 

98 

Over 60.... 

728 

1 

100 

60-70.... 

917 

1 

99 





Over 70. . 

501 

1 

100 

Totals. . . 

85,812 

100 

100 

Totals.. 

85,812 

100 

100 


For men the average number of hours worked per week was 45.6, 
and the average earnings per hour were 56.1 cents. The average 
weekly earnings for men were, therefore, $25.61. 

This general table indicates the following conclusions: For women 
the hours worked per week averaged 45, the hourly earnings 30.1 
cents, or average actual weekly earnings of $13.55. 

The 1903 Census Report on Employees and Wages showed that 
the average wage for women was approximately one-half that for men. 

1 Adapted from article by Paul H. Douglas in the Journal of Political Economy 
(January, 1921), pp. 78-80, reviewing Industrial Survey in Selected Industries in 
the United States, 1919. Preliminary report. United States Bureau of Labor 
Statistics, Bulletin No. 265. 




































WOMEN’S WORK AND WAGES 


333 


This proportion seems to hold today; if this study is representative , 
there has been no decrease in the disparity of wages between the sexes. 

b) women’s wages and hours in a high-wage state: 

RHODE ISLAND, I920 1 

Extent of Survey. —In the 70 establishments visited the total 
number of women was 10,352, distributed as follows: 84.5 per cent 

CHART A 

MEDIAN WEEKLY EARNINGS OF WOMEN IN RHODE ISLAND 

* 20.70 



in manufacturing establishments, 13.9 per cent in stores, and 1.7 per 
cent in laundries. 

Hours. —Hour data for 69 plants showed: 

{a) a schedule of 48 hours a week or less in 32 plants employing 
more than one-half (53.5 per cent) of the total number of women in 
the survey. 

(b) a schedule corresponding to the legal weekly limit of 54 hours 
a week in 5 plants employing 6.5 per cent of the total number of 
women. 

1 Adapted from Women’s Bureau, Bulletin No. 21. 












CHART B 


334 


THE WORKER IN MODERN ECONOMIC SOCIETY 



DOLLARS 
















































































































































WOMEN’S WORK AND WAGES 


335 


Wages .—Data on weekly and yearly earnings revealed the follow¬ 
ing: 

1. The median weekly earnings for 7,780 women in all industries 
included in the investigation were $16.85, in manufacturing establish¬ 
ments $17.85, in stores $12.95, an d in laundries $12.45. 

2. The median weekly earnings for 3,714 time workers were $14.55 
and for 3,417 pieceworkers $20.35. 

3. The median yearly earnings of 617 women in all industries were 
$829, in manufacturing establishments $857, in stores $699, and in 
laundries $767. 

4. Of all women in all industries nearly one-fourth (23.2 per cent) 
earned less than $13 a week and 7.7 per cent less than $10. From one- 
half to three-fourths of the women employed in laundries, paper-box 
factories, and 5-and 10-cent stores earned less than $13 a week, about 
one-quarter earning less than $10. 

5. Women were at the height of their earning power between 25 
and 40 years of age. Earnings after 40 years of age decreased less in 
proportion for women in general mercantile establishments and laun¬ 
dries than in other industries. 

Wages and hours combined .—By far the largest group of women— 
3,125 women, or 46.8 of the total number—is found in the 48 to 51 
hour classification, with median earnings of $17.75. 


336 THE WORKER IN MODERN ECONOMIC SOCIETY 

c ) WOMEN’S WAGES IN A MEDIUM-WAGE STATE: KANSAS, 1920 1 

CHART C 

MEDIAN WEEKLY EARNINGS BY INDUSTRY IN KANSAS 



TABLE LXIV 

Median Weekly Earnings by Industry 


Meatpacking.$17.50 

Offices. 13.55 

Miscellaneous Manufactur¬ 
ing . 12.70 

General Mercantile....... 11.95 

Clothing Manufacture. 11.7 5 


Telephones. 10.80 

Poultry Packing. 10.70 

Laundries. 10.50 

Other Food Manufacturing 10.15 

Five and Ten-Cent Stores. 8.10 

All Industries. 11.80 


d) women’s wages and hours in a low-wage state: Georgia, 

1920-2i 2 

The facts discussed in this report were obtained from two surveys. 
The first, begun May, and completed July, 1920, was made in the city 
of Atlanta. The second survey was made several months later, 
between February and April, 1921, and included the entire State, 
exclusive of Atlanta. 

1 Adapted from Women’s Bureau, Bulletin No. 17. 

2 Adapted from Women’s Bureau, Bulletin No. 21. 














WOMEN’S WORK AND WAGES 


337 


CHART D 

WEEKLY EARNINGS OF WHITE WOMEN, ALL INDUSTRIES— 

GEORGIA 

(Including Atlanta) 

P{R CENT 
OF WOMEN 



U e £ 4 5 6 7 6 S 10 II 12 13 W »5 16 17 »8 »9 20 21 22 *3 24 25 24 tl 28 29 30 3 ) 32 33 34 35 

DOLLARS 


CHART E 

MEDIAN WEEKLY EARNINGS BY INDUSTRY—WHITE AND 

NEGRO—GEORGIA 


♦is.*) 


ei2.*o 



Alt 

Industries 
















































































































338 THE WORKER IN MODERN ECONOMIC SOCIETY 


The median weekly earnings in the different industries during the 
late pay-roll period were as in Table LXV. 

The proportion of white women who earned less than $8.00 a week 
is nearly one-fifth (19.2 per cent) of all those engaged in industry. 

If we compare these figures with those of Kansas and Rhode Island 
-—other states where surveys were made at about the same—we find 
approximately one-fifth of the women in Kansas receiving less than 
$9.00 and one-fifth of those in Rhode Island receiving less than $12.50. 

TABLE LXV 



White Women 

Negro Women 

All industries. 

$ 12.20 

$ 6.20 

Department stores. 

13.20 

* 

Five and ten cent stores. 

9 25 

* 

Textile manufacturing. 

12.45 

5-95 

Knit-goods manufacturing. 

10.10 

6-35 

Garment manufacturing. 

12.20 

3 - 9 ° 

Cigar manufacturing. 

15.00 

6-55 

Food manufacturing. 

10.50 

io -35 

Miscellaneous manufacturing. 

9 i 5 

6.15 

Laundries. 

10.00 

6.05 


* Not computed, owing to small number involved. 


Hours .—Hour data for 102 plants showed: Weekly —A schedule 
of more than 54 hours for 72.7 per cent of the women; a schedule of 
48 or less for 1.5 per cent of the women; a schedule of 60 or more for 
27.2 per cent of the women; one-half of the women had a workday of 
10 hours and over and 14.4 per cent of n hours and over. 

That these hours are excessively long compared with those in 
other places is clear from the record of hours in two widely separated 
states—Kansas and Rhode Island—which are in striking contrast to 
those of Georgia. Establishments having scheduled weekly hours of 
48 or less comprised 55.7 per cent of those visited in Kansas, 46.4 per 
cent of those visited in Rhode Island, and 8.8 per cent of those visited 
in Georgia. The longest weekly hours in Kansas were reported for 
two establishments whose weekly hours were 56, while in Rhode Island 
the longest hours were 54, scheduled in five establishments. In 
Georgia, as already stated more than one-half of the establishments 
visited had a week of over 54 hours and more than one-quarter had a 
week of 60 hours and over. 





















WOMEN’S WORK AND WAGES 


339 


4. PRINCIPLES OF FIXING WOMEN’S WAGES 1 

The principle of determining wages by family obligations. —It is 
habitually pleaded as a complete justification for the existence of a 
female rate, out of all proportion lower than the male rate for analo¬ 
gous occupations or jobs, that the man’s wage covers the maintenance 
of a family, whereas the woman has only herself to keep. Even 
when the employer is getting the same output and the same value 
from women as from men, he has usually seen no impropriety in 
paying the women as a customary female rate, two-thirds of what he 
paid to the men for the same work, as a customary male rate. 

The principle of determining wages by family obligations must be 
rejected. —The unmarried man does not receive something less than 
the standard time wages because he has fewer responsibilities than the 
married man; nor does the childless man get less than the father of a 
large family. In so far as the matter is left to unfettered individual 
competition, or to collective bargaining, the employers in any industry, 
taken as a whole, pay to the several grades of men whom they employ 
only what they are compelled to pay by the relative “ supply and 
demand” of labour of the kind required at the particular time and 
place, or according to the standard rates for whole classes of labour 
that the Trade Unions have been able to enforce. The idea of varying 
the piece-work rate of different men in the same workshop according 
to their several family responsibilities never enters the head of any 
employer. 

The principle of the vested interest of the male. —The long-con¬ 
tinued exclusion of women from nearly all the better-paid occupations 
has been largely the result of the assumption that these occupations 
were the sacred preserve of men. Throughout the whole realm of 
manual labour the women have found equally closed against them, 
prior to the war, the occupations which had gained a relatively high 
occupational rate, together with the opportunities for training which 
might have enabled them to prove their competence and aptitude 
for the work. 

The outcome, down to the war, was a very general segregation 
of men and women in industry, the two sexes being very seldom 
employed on the same kinds of work, or in the production of exactly 

1 Adapted with permission from Mrs. Sidney Webb, The Wages of Men and 
Women: Should They be Equal ? pp. 15 , 17 - 23 , 42-44, 46 , 53"54. (Fabian Society, 
London, 1919.) 


340 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the same articles. Whether the segregation of the sexes in industry 
was influenced by custom and convention, or determined by relative 
aptitude, its result upon wages was to give rise to markedly different 
rates of remuneration for what was recognized as a “man’s job” and 
what as a “woman’s job.” It must be said that these markedly 
contrasted “men’s rates” and “women’s rates” bore no definite pro¬ 
portion to the physiological or mental expenditure of the workers of 
the two sexes in their several tasks, whether measured by their “ efforts 
and sacrifices,” or merely by time. Nor does it appear that the 
several rates were proportionate to the value of their service to the 
capitalist employer or to the manager for the municipality. We see 
no manner in which the relative value could be computed of such con¬ 
trasted services as the continuous delicate sorting or gauging or adjust¬ 
ing of minute components, which experience shows to be more effi¬ 
ciently done by women than by men, and the shifting of pig iron in 
the yard, for which the brute force of men of great strength is indis¬ 
pensable. 

The formula of equal pay for equal work .—We have still to mention 
what is at the moment the most fashionable formula on which it is 
assumed that the relation of men’s and women’s wages should be deter¬ 
mined, namely, that of “Equal Pay for Equal Work.” This can 
hardly be said to be an accepted principle, because there is no common 
interpretation of its meaning. In one sense “Equal Pay for Equal 
Work” has reference to the physiological and mental results to the 
operative. To the manual worker the giving up of a definite part of 
his daily life at a particular task seems the main factor, and this 
justifies to him the time rate for each particular occupation. 

In respect of the wages of the manual workers the more popular 
interpretation of “Equal Pay for Equal Work”’ has reference to the 
quantity and quality of the product, irrespective of the effect upon the 
several operatives. The product can, in some industries, be measured 
with sufficient accuracy to enable it to be made the basis of wage- 
determination. 

This commonsense interpretation of “Equal Pay for Equal Work” 
does, however, not meet with the approval of the employers in many 
industries. They urge that the wages of the workshop are not the 
only elements in the expenses of production. “Supposing you were 
going to employ nothing but women,” we are told by the representative 
of the United Tanners’ Federation, “I should say that could be only 
if the wages are lower. You could not get the same output from the 


WOMEN’S WORK AND WAGES 


341 


same area, the same plant, the same machinery, if you employed female 
labour entirely.” 

Another reason is given by the employers for a lower rate of pay¬ 
ment even on piecework to women than to men. “Equal pay should 
not be given to men and women engaged on the same or similar work,” 
we were told by a representative of the Cycle and Motor Industry, “it 
is a question of comparative total efficiency, i.e., a woman punching a 
ticket on a tram car may appear to be equal to a man. She, however, 
has not the same potential value, and would not be so useful as a man 
in the case of emergency, such as a breakdown, runaway, row, etc.” 

The formula of equal pay for equal work must be rejected , but only 
because of its ambiguity: —We have seen that this formula has no pre¬ 
cise meaning and is diversely interpreted by the persons concerned as 
(1) equal pay for equal efforts, and sacrifices; (2) equal pay for equal 
product; (3) equal pay for equal value to the employer. Hence any 
adoption of the formula would lead to endless misunderstanding 
between employers and employed, and increased industrial friction. 

Provision for the dependents. —I suggest that in the adoption of any 
principle whatever for the determination of wages, not merely between 
men and women, but between any other sections of the wage-earning 
population, the community must face the necessity of seeing that 
adequate provision is made for children not by statistical averages, 
but case by case. The “average” family is, of course, merely a con¬ 
venient figment of the statisticians, and does not exist in fact. If pro¬ 
vision is made in one way or another for three children, this is very far 
from securing enough food and adequate conditions of nurture for 
those households in which there are for years in succession four, five 
or more children dependent. The nation cannot be satisfied, any more 
than the children can, with a family or household “average” of rations 
for the rising generation. Each individual baby has got to be ade¬ 
quately and satisfactorily provided for. This cannot be done under 
any system of wages; nor can the adoption of any conceivable prin¬ 
ciple as to the relation between men’s and women’s wages achieve this 
end. In the actual course of nature the distribution of children among 
households varying from none to a dozen or more; the number who 
are simultaneously dependent on their parents varying from one to 
more than half a dozen; and the time in each family over which this 
burden of dependent children extends varying from a year or two to 
ten times that period—bear, none of them, any relation to the indus¬ 
trial efficiency either of the father or of the mother; or to the wage 


342 


THE WORKER IN MODERN ECONOMIC SOCIETY 


that either or both of them could obtain through individual bargain¬ 
ing by the higgling of the market; or yet to any actual or conceivable 
occupational or standard rates to be secured for them either by col¬ 
lective bargaining or legislative enactment. 

It will be necessary for the state to provide, through the parents, 
for the maintenance of the children during the period of their economic 
dependence. A children’s allowance on the scale of the present separa¬ 
tion allowance, payable to the mothers in all the households of the 
United Kingdom, would cost something like 250 millions sterling 
annually, which (as may be mentioned by way of comparison only) 
would be equal to about a half of the proceeds of the existing Income 
Tax, Super-tax, and Excess Profits Duty. 

It has been suggested that this charge might be thrown, at any 
rate in part, upon employers of labour by a weekly stamp duty analo¬ 
gous to the charge under the National Insurance Acts, of an identical 
sum for each person employed, of whatever age or sex. The proceeds 
could then be distributed, subject to the necessary conditions, at the 
rate of so much per week per child, through the local health or local 
education authorities, to all mothers of children under the prescribed 
age. 

5. THE DEPENDENTS OF WOMEN WORKERS 1 

We try to answer the following question: “In fixing minimum 
wages for women, should any allowance be made for dependents, and 
if so, for how many?” 

Definition of a dependent. —For the purpose of this inquiry we 
regarded a person as dependent, or partially dependent, on a worker, 
if the latter’s wage, whether large or small, had to be shared between the 
two, but no equivalent in service was demanded from the former. For 
instance, if three or four daughters were earning, and they contributed 
to their widowed mother who looked after the home a sum not in excess 
of that which they would have paid for similar accommodation if 
lodging with strangers, they would really be employing their mother 
as their housekeeper, and would not be considered as having depend¬ 
ents. If, on the other hand, the mother were an invalid, and the girls 
looked after her and themselves, or if on her account they paid a sum 
in excess of what would normally be paid for equivalent accommoda¬ 
tion, they would be considered as partly supporting their mother. 

1 Adapted with permission from Rowntree and Stuart, The Responsibility of 
Women Workers for Dependents (1921), pp. 6-7, 29, 7-10, 15, 17, 19-21, 31, 32, 
36-42. 


WOMEN’S WORK AND WAGES 


343 


Take the case of a girl belonging to a family where the earnings 
of the chief wage-earner are too low to maintain his wife and young 
children in a state of physical efficiency. She pays no more for board 
and lodging than she would have to pay if lodging with another family. 
Possibly, indeed, she pays less. Yet, we have regarded her as partially 
responsible for the support of dependents, because, owing to the house¬ 
hold’s poverty, her earnings constitute an important part of the total 
income. On the other hand, we have not regarded a girl as having 
dependents, even if she pays more than the market price for her board 
and lodgings, if the income of the chief wage-earner is sufficiently 
high to render such action on her part unnecessary. 

The result of the investigation .—The total number of houses called 
at in the eleven towns investigated was 67,333, and in these we found 
13,637 women workers aged 18 years or over. 

Out of the 13,637 working women concerning whom we obtained 
information, 11,982 or 87.94 per cent supported themselves only, and 
1,645 or 12.06 per cent wholly or partially supported others. 

The proportion of working women who have dependents varies 
greatly according to their age. It is under 7! per cent at ages 18-20, 
and rises steadily till the age group 36-40 is reached when no less than 
28 per cent of working women have persons wholly or partially depend¬ 
ent on them. After this, the proportion drops again as the age 
advances, falling to 6 per cent of women over 60. 

The full figures are given in the following table: 


Age Groups 


18-20.... 
21-25- 

26-30.... 

3 I_ 35 - 

36-40- 

41-50- 

51-60- 

Over 60.. 

' Total 


TABLE LXVI 


Total Women 

Women Workers 

Percentage of Total 

Workers Investigated 

with Dependents 

Women Workers 

4,970 

369 

7.42' 

► 8.79 

4,503 

464 

I 0 . 32 J 

1,843 

297 

16. II 


685 

166 

24.23 


725 

584 

203 

114 

28.00 

19-54 

> J 9-5 

227 

26 

n -45 


IOO 

6 

6.00 


13,637 

1,645 

12.06 


In considering the table it must be borne in mind that although 
the proportion of the older women who have dependents is high, their 
total number is comparatively small. Of the 1,645 women with 


























344 


THE WORKER IN MODERN ECONOMIC SOCIETY 


dependents whose cases we investigated, over half were under 26 years 
of age, while two-thirds were under 30. Only 369 belonged to the age 
groups 31-40, where the proportion of women having dependents was 
very high. 

Having now dealt with the proportion of working women who have 
dependents, we may next inquire how many dependents they have. 

It would have complicated matters unduly to estimate the burden 
of maintaining a child according to its age, and so we have, in all cases, 
assumed that the burden of maintaining a child, of any age, was two- 
thirds of that of maintaining an adult. 

Working on these lines, and taking each child, irrespective of age, 
as equal to two-thirds of an adult, we get the following results. Out 
of 1,645 women workers with dependents, 2 were responsible for 4 or 
more adults; 5 for between 3 and 4 adults; 16 for between 2 and 3 
adults; 57 for between ij and 2 adults; 295 for between 1 and ij 
adults; 876 for between | and 1 adult; 394 for less than half an adult. 

The average number of dependents which the women workers had 
to support was 0.71, or a little under three-quarters of an adult. 

In our inquiry we dealt with 1,757 married women and widows, 
of whom 23 per cent had dependents, whereas amongst the single 
women we investigated, only 10.45 P er cent had dependents. 

The reasons why women workers have dependents .—Our investigation 
disclosed the following important facts, namely, that two-thirds of the 
cases in which women workers are responsible for the maintenance of 
dependents are due to the death of the normal breadwinner, i.e., either 
the father or the husband, and that the illness of the father or the hus¬ 
band accounts for a further 12.6 per cent of the cases. The remaining 
one-fifth of the cases are due to a number of miscellaneous causes. 

In view of the facts disclosed by this investigation, it cannot be 
taken as normal that women workers have others to support besides 
themselves. It follows, therefore, that if minimum wages are to be 
based on normal conditions (and no other method appears practicable), 
the minimum wage for a woman should merely be the sum which is 
sufficient for her own maintenance, in health and comfort, with a 
margin for contingencies and recreation. 

We must, however, face the fact that such a wage no more meets 
the case of the woman worker with dependents than a minimum wage 
based on a man’s normal needs would meet abnormal conditions in his 


case. 


WOMEN’S WORK AND WAGES 


345 


It would not, however, be impracticable to adopt within a reason¬ 
able period a scheme of social insurance which would cover the prin¬ 
cipal risks and contingencies. 

In 6.34 per cent of the cases examined, the responsibility of 
women workers for dependents arose because the breadwinner’s 
wages were too low to maintain even a normal family, or because the 
size of the family was abnormal. 

Taking all the causes which lead to the responsibility of women 
workers for dependents, we find that 65 per cent of them would be 
obviated by the adoption of an adequate scheme of widows’ pensions, 
and i2§ per cent by increasing of the grant paid to chronic invalids 
under the National Health Insurance scheme to an amount sufficient 
for complete maintenance. A further 6 per cent would be obviated 
by the payment of an adequate minimum wage, and the granting of 
state aid to wage-earners who had more than three dependent children. 
If these measures were adopted, only 15 per cent of the women workers 
who maintained dependents would be left to deal with. 


6. A MINIMUM BUDGET FOR WORKING WOMEN 

IN 1919 1 

The following, accordingly, is the sort of full temporary inde¬ 
pendence budget that the writer, pending fuller information on family 
costs considers to have been adequate but conservative for a working 
woman in Philadelphia, a fairly typical eastern city, in January, 1919. 2 


FULL “TEMPORARY INDEPENDENCE” BUDGET MINIMUM WEEKLY RATES 

Boarding 

Room, board, lunches, and partial 
laundry. $9.05 


At Home 

Daughter’s share of housekeeping ex¬ 
penses, plus mother’s services.... $7.80 
Daughter’s subsidy to family. 1.25 


•05 


Total 

Carried forward . 


$ 9-05 


$9.05 


1 Adapted from Dorothy W. Douglas, “Cost of Living for Working Women,” 
Quarterly Journal of Economics (February, 1920), pp-. 257-58. (Harvard Uni¬ 
versity Press.) 

2 The cost of living since that date has not declined materially. By June, 
1922, it had fallen about 4 per cent. 








346 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Brought forward . $9.05 

Clothing ($130.00 a year). $2.50 

Toilet articles, soap, etc. ($5.20 a year).10 

Carfare (10 cents a day).60 

Health ($21.00 a year).40 

Stamps and stationery (25 cents a month).06 

Amusements (movies, ice cream, etc.).35 

Vacation: 

Room and board, 1 week.$10.00 

R. R. fare. 2.00 

Spending money. 1.00 

Other trips over night. 1.60 

$14.60 

Money saved on regular meals and carefare during 

vacation.$6.80 

Net cost of vacation.7.80 .15 

Education (papers and magazines).15 

Extra carfare (10 cents every two weeks).05 

Dues.05 

Church and charity.15 

Christmas presents, etc. ($3.65 a year, excess of 

gifts given over gifts received).07 

Insurance ($13.00 a year).25 

Other expenses (unforeseen $3.65 a year).07 

Loss of wages, 1 week’s illness ($15.00).30 

Loss of wages, 1 week’s vacation or unemployment 

($15.00).30 

Savings ($21.00 a year).40 

Total.$15.00 


PROBLEMS 

1. ( a) What proportion of women in the United States were gainfully 
employed in 1920 ? In 1910? Comment. 

(b) To what extent are women entering new avenues of employment ? 

(c) What occupations show the greatest increase? The greatest 
decrease ? 

2. Compare the age of the average working woman with the age of the 
average working man; the duration of wage-earning employment. What 
bearing do these factors have upon the positions at which women are 
engaged in industry ? 

3. Women’s wages average approximately half those of men. How do you 
explain this? 




























WOMEN’S WORK AND WAGES 


347 


4. It is advocated by many that women as compared with men should 
receive “equal pay for equal work.” What does this phrase mean ? Do 
women in general perform “equal work” with men now ? Why or why 
not ? 

5. “Women are compelled as a rule not only to support themselves but to 
provide a large part, in many cases all, of the support of other persons 
as well. An adequate minimum wage rate should therefore cover the 
cost of living for dependents, and not merely for the individual” (Womens 
Bureau, U.S. Dept, of Labor). Comment. 

6. Do women’s wages tend to lower men’s wages? If so, in what ways? 
If not, why not? 

7. What effect would bringing women’s wages to an equality with men have 

upon ( a ) the employment of women ? ( b ) men’s wages ? 

8. What percentage of working women live at home and what percentage 
away from home ? 

REFERENCES FOR FURTHER READING 

Abbott, Edith, Women in Industry 

Douglas, Dorothy W., “The Standard of Living of Working-Women, 
A Criticism of Current Theories,” Quarterly Journal of Economics , 
XXXIV (February, 1920), 225-59 

Henry, Alice. The Trade Union Woman 

McLean, Annie M., Wage-Earning Women 

Report on Conditions of Women and Children Wage-Earners in the United 
States, Senate Document 645, 61st Congress, 2d Session 

Webb, Beatrice, The Wages of Women and Men: Should They Be Equal? 

Women’s Bureau, United States Department of Labor, Bulletin 23, Family 
Status and Breadwinning Women 


CHAPTER XI 

HOURS OF LABOR 

A. General Aspects 

i. THE MOVEMENT TOWARD SHORTER HOURS 1 

Within recent years, there has been a distinct reduction of the 
hours of work. A century ago, prevailing hours of labor in manu¬ 
facturing were approximately twelve per day. This has gradually 
been reduced and within the last twenty years, the downward trend 
has been particularly rapid. While we do not have adequate figures 
for the prevailing hours of work prior to 1909, the statistics for ten 
manufacturing trades (seven of them union trades) indicate that by 
1918 the length of the working week had decreased between n and 12 
per cent as compared with the average for the ten years 1890-99. 
From 1909 on, we have statistics which give a fairly good picture of 
what has happened in manufacturing. The hours of work which are 
shown in Table LXVII are the “prevailing” hours of work in the vari¬ 
ous manufacturing establishments. Some individuals, such as watch¬ 
men and engineers in these plants might regularly work more than the 
“prevailing” number of hours. Moreover, during rush periods large 
sections of the force might work considerable quantities of overtime 
and during slack seasons would probably work appreciably fewer 
hours per week. While there are these seasonal and cyclical varia¬ 
tions, it seems probable that the figures are approximately correct 
in indicating the secular (long-time) movement in hours. 

PREVAILING HOURS OF WORK IN AMERICAN MANUFACTURING 

INDUSTRIES 2 

A clearer idea of the tendency towards shorter hours is perhaps 
secured if the percentages are arranged cumulatively, as in Table 
LXVIII. 

Thus by 1919, nearly one-half of the employees worked in establish¬ 
ments which had adopted the forty-eight-hour week as their standard 
week as compared to the one-thirteenth in 1909 and the one-eleventh 

1 Prepared. 

2 Taken from the Statistical Abstract of the United Slates 1921, p. 343, and the 
Thirteenth Census , VII (1910), p. 306. 


348 


HOURS OF LABOR 


349 


in 1914 who worked under such conditions. By 1919, approximately 
two-thirds were in establishments working less than fifty-four hours a 
week while in 1909 only one-sixth, and in 1914 only one-fourth were 
in such establishments. Three-quarters were in establishments work¬ 
ing less than fifty-five hours in 1919, as compared with three-tenths 
in 1909 and one-half in 1914. 


TABLE LXVII 


Prevailing Hours 
per Week 

Percentage of Employees in Establishments 
with Prevailing Hours 

1909 

1914 

1919 

48 or less. 

7-9 

11.8 

48.6* 

49-53. 

7-3 

13-4 

16.4 

54 . 

15-4 

25.8 

9.1 

55-59 . 

30.2 

21.9 

13-7 

60. 

30-5 

21.2 

9.1 

Over 60. 

8.7 

5-8 

3 -o 


*This includes 12.2 per cent who worked forty-four hours or less and 3.8 per 
cent who worked between forty-five and forty-seven hours a week inclusive. 


TABLE LXVIII 


Year 

Less than 

49 Hours 

Less than 

54 Hours 

Less than 

55 Hours 

Less than 

60 Hours 

Less than 

61 Hours 

1909 . 

7-9 

15-2 

3 °.6 

60.8 

913 

I 9 H. 

11.8 

25.2 

5 1 • 1 

73-0 

94.2 

1919 . 

48.6 

65.2 

74-3 

87.0 

97.O 


The change may be stated in still another manner. In 1909, the 
largest group of workers, 60.9 per cent, were in establishments whose 
prevailing weekly hours were from fifty-five to sixty inclusive, while 
in 1919, the largest single group, 48.6 per cent, worked forty-eight 
hours per week or less, while 65.2 per cent worked less than 54 hours 
per week. 

The eight-hour day (on the basis of six full days’ labor) has there¬ 
fore been realized for nearly half of the labor in manufacturing indus¬ 
tries. There are still some industries, however, where a long day is 
the common practise, notably the continuous process industries such 
as iron and steel, cement, ice, etc., where the two shift system, or the 
twelve-hour day, is prevalent. Frequently, in addition the seven-day 
week is imposed on top of this. 




































35o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


In mining, the hours of labor have also been shortened; in 1919, 73.5 
per cent were in mines working from 44 to 53 hours inclusive. 1 It is per¬ 
haps significant that the hours of labor tended to be appreciably 
shorter in those branches of mining where the workers are unionized, 
such as bituminous and anthracite coal mining, than elsewhere. The 
last two decades have also witnessed a reduction in the number of 
hours worked on the railways. The Adamson law fixing the basic 
day at eight hours for train-service employees has operated to bring 
the actual hours of work nearer to this point. 

2. THE DIFFERENCE BETWEEN THE EIGHT-HOUR 
DAY AND THE EIGHT-HOURS’ BASIC DAY—AN 
EMPLOYER’S VIEW 2 

For years a campaign has been waged by the American Federation 
of Labor for what it has been pleased to call the “eight-hour working 
day.” It was alleged that more than eight hours’ work tired the 
worker, made it impossible for him to devote the necessary time to 
mental improvement and deprived him of time which he could other¬ 
wise spend with his family. 

Coupled with the demand for the eight-hour working day, how¬ 
ever, there was always the insistence that overtime in excess of eight 
hours should be compensated for on a basis of time and a hah or double 
time. Gompers asserted that the purpose of this was to prevent or 
deter the employer from working his people more than eight hours. 

The eight-hour day is used by organized labor leaders simply as 
a means for securing increased wages. 

It has been estimated that only 5^ per cent of the workers of the 
country who are on an eight-hour basis are working actually eight 
hours. The others are working as many hours as they can secure, and 
drawing punitive overtime pay. 

The purpose of punitive overtime is not to restrain the employer 
from working his people more than eight hours, but to secure for 
those people additional increases in pay which could not be obtained 
otherwise. 

Their health is just as much impaired by three hours’ excess time 
at double-time wages as by three hours’ excess time at normal wages. 

1 Fourteenth Census, XI (1920), 31. 

a Adapted with permission from “The Pretense of the Eight-Hour Day,” in the 
Review (August, 1917), pp. 330-34. 


HOURS OF LABOR 


351 


B. Some Arguments Advanced for and against Shorter Hours 
3. THE CITIZENSHIP ARGUMENT FOR A SHORTER DAY 

a) AN ILLUSTRATION OF THE EFFECTS OF THE LONG DAY 1 

Approximately half of the employees in iron and steel manufactur¬ 
ing plants are subjected to the schedule known as the twelve-hour day 
(that is, a working day from n to 14 hours long). 2 

Less than one-quarter of the industry’s employees can work under 
60 hours a week “ although in most industries 60 hours was regarded 
as the maximum working week” ten years ago. 

In the past decade the U.S. Steel Corporation has increased the 
percentage of its employees subject to the twelve-hour day. 

First, what exactly is the schedule of the twelve-hour worker ? 
Here is the transcript of the diary of an American worker, the observa¬ 
tions of a keen man on how his fellows regard the job, the exact record 
of his own job and hours made in the spring of 1919, before the strike 
or this Inquiry, and selected here because no charge of exaggeration 
could be made concerning it. It begins: 

Calendar of one day from the life of a Carnegie steel workman at Home¬ 
stead on the open hearth, common labor: 

5:30 to 12 (midnight)—Six and one-half hours of shoveling, throwing 
and carrying bricks and cinder out of bottom of old furnace. Very hot. 

12:30—Back to the shovel and cinder, within few feet of pneumatic 
shovel drilling slag, for three and one-half hours. 

4 o’clock—Sleeping is pretty general, including boss. 

5 o’clock—Everybody quits, sleeps, sings, swears, sighs for 6 o’clock. 

6 o’clock—Start home. 

6:45 o’clock—Bathed, breakfast. 

7:45 o’clock—Asleep. 

4 p.m. —Wake up, put on dirty clothes, go to boarding house, eat supper, 
get pack of lunch. 

5:30 p.m. —Report for work. 

This is the record of the night shift; a record of inevitable waste, 
inefficiency and protest against “arbitrary” hours. Next week this 
laborer will work the day shift. What is his schedule per week? 
Quoting again from the diary: 

1 Adapted with permission from the Inter church World Movement Report on 
the Steel Strike of 1919, pp. 44-82. The Commission of Inquiry, Bishop Francis 
J. McConnell, Chairman. (Harcourt, Brace & Howe, 1920.) 

2 This was written in 1920. 


35 2 


THE WORKER IN MODERN ECONOMIC SOCIETY 


‘‘Hours on night shift begin at 5:30; work for twelve hours through the 
night except Saturday, when it is seventeen hours, until 12 Sunday noon, 
with one hour out for breakfast; the following Monday ten hours; total 
from 5:30 Monday to 5:30 Monday, 78 hours, the normal week. 

The Carnegie Steel worker works 87 hours out of the 168 hours in the 
week. Of the remaining 81 he sleeps seven hours per day; total of 49 hours. 
He eats in another fourteen; walks or travels in the street car four hours; 
dresses, shaves, tends furnace, undresses, etc., seven hours. His one reaction 
is “What the Hell!”—the universal text accompanying the twelve-hour day. 

None can dispute the demoralizing effects on family life and com¬ 
munity life of the inhuman twelve-hour day. As a matter of arithmetic 
twelve-hour-day workers, even if the jobs were as leisurely as Mr. 
Gary says they are, have absolutely no time for family, for town, for 
church or for self-schooling, for any of the activities that begin to 
make full citizenship; they have not the time, let alone the energy, 
even for recreation. 

At Johnstown a member of the Commission was approached by a 
man of middle age who said that he was determined never to go back 
to work until the question of hours was settled. He gave as his reason 
the fact that his little daughter had died within the last few months; 
he said he had never known the child because he was at work whenever 
she was awake, or else he was asleep, during the day time. He was 
determined that he would know the other children and for that reason 
felt that it was imperative that he should have the eight-hour day. 

This man was an American, getting good wages and embittered, 
not by “outside agitators” but by the facts of his life as he found 
them. 

In the twenty-eight pages of the Senate Committee’s Report on 
the steel strike much space is devoted to the need for Americanization. 
Only a few lines were devoted to the twelve-hour day. But Americani¬ 
zation is a farce, night schools are worthless, Carnegie libraries on the 
hilltops are a jest, churches and welfare institutions are ironic while 
the steel worker is held to the twelve-hour day or the fourteen-hour 
night. Not only has he no energy left, he has literally no time left 
after working such schedules. He has not even time for his own 
family. 

The facts have long been known. The National Association of 
Corporation Schools, the chief employers’ organization for furthering 
workers’ education, at its 1919 session heard A. H. Wyman of the 
Carnegie Steel Company of Pittsburgh cite the reasons given by immi- 


HOURS OF LABOR 


353 

grant workers for dropping out of the nightly English classes for 


foreigners in the South Chicago public schools: 

Fatigue from long hours. 27 

Change of jobs, unable to get to school by 7 p.m . 36 

Change from day to night work. 37 

Overtime work. 69 

Total. 169 


That is, nearly fifty per cent of the startlingly small group of 341 
enrolled out of the tens of thousands in the district dropped out for 
reasons connected with hours. Mr. Wyman did not mention the 
relation of steel workers’ hours to the defeat of the South Chicago 
Americanization educational campaign; neither did anybody else in 
the audience mention it. 

b) AN ARGUMENT BY MR. GOMPERS FOR THE EIGHT-HOUR DAY AS 

A CITIZENSHIP MEASURE 1 

The general reduction of the hours of labor to eight per day would 
reach further than any other reformatory measure; it would be of 
more lasting benefit; it would create a greater spirit in the working¬ 
man; it would make him a better citizen, a better father, a better 
husband, a better man in general. The “voting cattle,” so-called, 
those whose votes are purchased on election day, are drawn from that 
class of our people whose life is one continuous round of toil. They 
cannot be drawn from workingmen who work only eight hours. A 
man who works but eight hours a day possesses more independence 
both economically and politically. It is the man who works like his 
machine and never knows when to stop, until in his case perpetual 
motion is almost reached —he is the man whose vote you can buy. 
The man who works longest is the first to be thrown out on the side¬ 
walk, because his recreation is generally drink. 

4. A REDUCTION OF HOURS AN INCREASE OF WAGES 2 

“Well,” says a workingman, “I should certainly be very glad to 
work less hours, but I can scarcely earn enough by working ten to 
make myself and family comfortable.” 

1 Adapted with permission from Samuel Gompers, Labor and the Common 

Welfare , p. 100, and embodying a statement of August, 1883. (E. P. Dutton 

& Co.) 

2 An article written by Ira Stewart and reprinted from the Documentary 
History of American Industrial Society , IX, 284-90. Edited by J. R. Commons. 
(Arthur H. Clark Co.) 








354 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Sir, as strange as it may seem to you at first blush, it is a fact that 
your wage will never be permanently increased until the hours of 
labor are reduced. Have you never observed that those who work 
the hardest and longest are paid the least, especially if the employ¬ 
ment is very disagreeable, while those whose employment is more 
agreeable usually receive more, and many who do nothing receive more 
than either ? 

You are receiving your scanty pay precisely because you work so 
many hours in a day, and my point now is to show why this is true, 
and why reducing the hours for the masses will eventually increase 
their wages. 

The truth is, as a rule, that men who labor excessively are robbed 
of all ambition to ask for anything more than will satisfy their bodily 
necessities, while those who labor moderately have time to cultivate 
tastes and create wants in addition to mere physical comforts. How 
can men be stimulated to demand higher wages when they have little 
or no time or strength to use the advantages which higher wages can 
buy, or procure? 

Take an extreme case for illustration of this—that of an average 
operative or mechanic employed by a corporation fourteen hours a 
day. His labor commences at half-past four in the morning, and does 
not cease until half-past seven in the evening. How many newspapers 
or books can he read ? What time has he to visit or receive visits ? 
to take baths? to write letters? to cultivate flowers? to walk 
with his family ? Will he not be quite as likely to vote in opposition 
to his real interests as in favor ? What is his opinion good for ? Will 
any one ask his advice ? Which will he most enjoy, works of art, or 
rum ? Will he go to meeting on Sunday ? Does society care whether 
he is happy or miserable? sick or well? dead or alive? How 
often are his eyes tempted by the works of art? His home means 
to him his food and his bed. His fife is work, with the apparition, 
however, of sometime being without, for his work means bread! 
“Only that and nothing more.” He is debased by excessive toil! He 
is almost without hope! 

From the fourteen hour system let us turn to that of eight hours 
for a day’s work and see if the real secret of low and high wages 
does not lie in the vast difference which the two systems make in the 
daily habits and ways of living of the masses. In the eight hour 
system labor commences at seven o’clock a.m., and, as an hour and a 


HOURS OF LABOR 


355 


half is allowed for dinner, the labor of the day ends at half-past four 
in the afternoon, instead of half-past seven in the evening. Think 
carefully of the difference between the operative and mechanic leav¬ 
ing his work at half-past seven (after dark, the most of the year), and 
that of the more leisurely walk home at half-past four p.m., or three 
hours earlier. Remember also that there is a vast difference in the 
strength and feelings of those who commence labor at half-past four 
in the morning, and those who commence two hours and a half later, 
or at seven o’clock. It is the hard, practical, necessary differences 
between the two systems which control the daily habits and thoughts 
of all who are living under them. 

But we must confine ourselves to the first simple fact that a reduc¬ 
tion of hours is an increase of wages; and when we are perfectly satis¬ 
fied of its soundness we can build upon it until the consequences grow 
to the extent of our comprehension or imagination. 

Think then of the difference which will soon be observed in a man 
or woman emancipated by the eight-hour system from excessive toil. 
Not the first day nor the first week, perhaps, but in a very little while. 
The first feeling may be one merely of simple relief; and the time for a 
while may be spent, as are many of the Sabbaths, by the overworked, 
in sleeping and eating, and frequently in the most debasing amuse¬ 
ments. The use which a man makes of his leisure, depends largely 
upon the use which has been made of him. If he has been abused, he 
will be pretty sure to abuse his first opportunities. An hour, in the 
hands of John Quincy Adams, meant a golden opportunity, in the 
hands of a Newcastle Collier it means debauchery, and in the hands 
of a New England operative, an hour extra will mean the difference 
balanced, or divided between the two. 

Many make the mistake of supposing that leisure will be abused 
by workingmen, as if leisure of itself were necessarily corrupting. 
Leisure, however, is neither positively good, or bad. Leisure, or time, 
is a blank—a negative—a piece of white paper upon which we stamp, 
picture, or write, our past characters. 

The charge that men will abuse the privilege of more leisure is the 
objection continually urged against liberty, and the answer to the 
latter will probably be a sufficient reply to the former. 

Mankind will be virtuous and happy when they have full power 
to choose between good and evil, with plenty of motives for deciding 
right. Men will not abuse power when they are made responsible 


356 THE WORKER IN MODERN ECONOMIC SOCIETY 

for its abuse. While therefore giving the masses more time will give 
them increased power to do wrong, the motives to do right will increase 
very much faster. 

Assuming that the leisure we propose is not so positively debasing, 
let us return to the main question. My theory is, (i) That more 
leisure will create motives and temptations for the common people 
to ask for more wages. (2) That where all ask for more wages, there will 
be no motive for refusing, since employers will all fare alike. (3) 
That where all demand more wages, the demand cannot be resisted. 
(4) That resistance would amount to the folly of a “strike” by 
employers themselves, against the strongest power in the world, viz., 
the habits, customs, and opinions of the masses. (5) That the change 
in the habits and opinions of the people through more leisure will be 
too gradual to disturb or jar the commerce and enterprise of capital. 
(6) That the increase in wages will fall upon the wastes of society, in 
its crimes, idleness, fashions, and monopolies, as well as the more 
legitimate and honorable profits of capital, in the production and dis¬ 
tribution of wealth, and (7) In the mechanical fact, that the cost of 
making an article depends almost entirely upon the number manu¬ 
factured is a practical increase of wages, by tempting the workers 
through their new leisure to unite in buying luxuries now confined to 
the wealthy, and which are costly because bought only by the wealthy. 

5. THE ARGUMENT BY MR. GOMPERS THAT SHORTER 
HOURS WILL MAKE MORE WORK FOR THE 

UNEMPLOYED 1 

Is it not time that something should be done to reclaim from misery 
the many thousands of good and true men whose only fault is that 
they have stomachs to fill, with ready and willing hands to supply their 
wants, but continually receiving the stereotyped reply in answer to 
their appeals for work, “No job open” ? 

Much can be done by the trades unions to relieve the distress 
caused by the displacement of labor by machinery. Within the past 
few years the trades unions have sought and in many instances secured 
a reduction in the hours of labor; for a brief period there has been a 
stagnation in this direction. 

I appeal to the trades unions of the country to go on in this work. 
The answer to all opponents to the reduction of the hours of labor 

1 Adapted with permission from Samuel Gompers, Labor and the Common Wel¬ 
fare , pp. 97-98, and embodying a statement made in 1887. (E. P. Dutton & Co.) 


HOURS OF LABOR 


35? 


could well be given in these words: “That so long as there is one man 
who seeks employment and cannot obtain it, the hours of labor are 
too long” (December, 1887). 

% 

6. THE EFFECT OF SHORTER HOURS UPON PRODUCTION 

a) MR. GOMPERS’ ARGUMENT 1 

Interesting facts are being constantly demonstrated relative to 
the economic advantage resulting from the movement to reduce the 
hours of labor to eight per day. It is clearly shown that there has 
been neither diminution in the quantity produced, nor has the quality 
of work deteriorated by reason of the shorter workday (Gompers, 
Federationist , November 1905). 

The industrial wage-workers reply: “There has been no diminu¬ 
tion of output by reason of the reduction of hours of labor from ten 
to eight; in not a few occupations the output has not varied from the 
results of ten hours, the number of human workers remaining the same 
in proportion (December, 1910). 

Eight hours in peace or in war is our slogan to conserve human life 
and insure greatest output ( Federationist , June, 1917). 

b ) AN AMERICAN EXPERIMENT WITH THE EIGHT- A.ND THE TEN- 

HOUR DAY 2 

In the building of the two battleships, the “ Connecticut ” and 
the “Louisiana,” we have a concrete case offering opportunity for 
the study and comparison, not only of contract versus direct labor, 
but also of the eight-hour day versus the ten-hour day. The former 
battleship is being built by direct labor in the United States Navy 
Yards in Brooklyn under the eight-hour day and by union men. The 
battleship “Louisiana” is being built by contract by the Newport 
News Shipbuilding Co., employing its men ten hours a day. 

The work done on the contract ship is far more rapid than has 
ever been done by contracting firms building battleships heretofore, 
as it is well understood that there is to be a race between the direct 
labor in the navy yards and contract labor at Newport News. At 
the date of launching, the number of pounds worked in per hour was, 
for the “Louisiana,” 5.1; for the “Connecticut,” 6.3. The average 
number of pounds worked in for ten hours or one day, by men working 

1 Adapted with permission from Samuel Gompers, ibid., pp. 81-83. 

2 Taken from “The Case for the Shorter Work Day,” Brief for Defendant in 
Error, Vol. I, by F. Frankfurter and J. Goldmark. Written by Ethelbert Stewart, 
Commons, XX (May, 1905), 679-81. 


358 THE WORKER IN MODERN ECONOMIC SOCIETY 


full time of ten hours on the “Louisiana” was 500; average worked 
in by men working full time of eight hours on the “Connecticut” was 
470. This shows that the average production of a man per hour on 
the “Connecticut” exceeded by over 24 per cent. 

So far, the claim of labor leaders that the eight-hour day is pro¬ 
ductive of better work and just as much of it in the skilled trades as 
the ten-hour day seems to be amply sustained. 

c) THE BRITISH WAR-TIME EXPERIENCE WITH THE EFFECT OF HOURS 
UPON OUTPUT—EXCERPTS FROM THE REPORT OF THE BRITISH 
HEALTH OF MUNITION WORKERS COMMITTEE 1 

At a very early stage of the war the ordinary restrictions on hours 
of employment were widely relaxed. Sunday labor, previously for¬ 
bidden for women and young persons, and practically unknown for 
men except in a few continuous processes, became common. Night 
employment, which for 50 years had been abolished entirely for women 
and in the main for boys became regular. The strain of these hours , 
in itself severe, was increased through large numbers of men and women 
taken into employment being unaccustomed to such labor , or being physi¬ 
cally less able to bear the strain than the selected body of workers previously 
employed . 2 The difficulties of housing and transit became accentu¬ 
ated and the conditions of employment were frequently makeshift 
and inconvenient. The employment of men for 70 to 90 hours a week 
was common, for over 90 hours was not infrequent, and there were 
even cases of hours in excess of 100. 

The evidence, however, showed that the long hours are open to 
certain serious objections: 

a) They are liable to impose too severe a strain on the workers. 

b) At any rate, after a period, the rate of production tends to 
decrease, and the extra hours produce proportionately little or no 
additional output. Moreover, the quality of the output may be 
adversely affected during the whole period of work, and not only 
during the hours of overtime. 

c) A large proportion of the hours gained may be lost through 
broken time; the workers become exhausted and take a rest; sickness 

1 Taken from Industrial Health and Efficiency , pp. 65-79. Bull. 249. Pub¬ 
lished by the U.S. Department of Labor, Bureau of Labor Statistics. Govern¬ 
ment Printing Office, Washington, 1919; also Monthly Labor Review (November, 
1917), pp. 61-62. 

2 Italics ours. — Ed. 


HOURS OF LABOR 


359 


tends to increase, at any rate among the older men and those of weak 
constitution. 

d) They lead to an undue curtailment of the periods of rest and 
sleep available for those who have to travel long distances to and from 
work. 

e) The fatigue entailed increases the temptation of men to indulge 
in the consumption of alcohol; they are too tired to eat, and therefore 
seek a “stimulant.” 

/) A very serious strain was imposed upon the management, the 
executive staff, and the foremen, both on account of the actual length 
of the hours worked and of the increased anxiety over the maintenance 
of the output and quality of the work; the staff can not take days off 
like ordinary workers. 

Observations extending over a period of 13! months upon the 
output of workers employed in making fuses showed that a reduction 
of working hours was associated with an increase of production both 
relative and absolute. The rate of production changed gradually, 
and did not reach an equilibrium value before the expiration of four 
months. Thereafter it remained steady during the period of 3J to 
5 months during which it was observed. The gradual change nega¬ 
tives the suggestion that the effect was a mere consequence of the 
desire to earn the same weekly wage as before the hours were short¬ 
ened. 

Owing to the reduction of the working time, first by a change from 
a 12-hour day to a io-hour day and subsequently by the abolition of 
Sunday labor, it was possible to compare output under three con¬ 
ditions. The group of women (numbering from 80 to 100) engaged 
in the moderately heavy labor of turning aluminum fuse bodies pro¬ 
vided the following comparative results: 

When actually working 66.2 hours a week and nominally 74.8 
hours their relative hourly production was 100 and their relative gross 
production 100. 

When actually working 45.6 hours and nominally working from 
49.5 to 58.5 hours their hourly production was 158 and their gross 
production 109. 

It is therefore to be inferred that had these women been work¬ 
ing uniformly a nominal 50-hour week their gross output would 
have been as large as when they were working a nominal 66-hour week, 
and considerably greater than when they were working a 77-hour 
week. In other words, a considerable addition to the leisure time of 


360 THE WORKER IN MODERN ECONOMIC SOCIETY 

the operatives would have substantially improved the total output 
of the factory. 

A group of 40 women engaged in the light labor of milling a screw 
thread on the fuse bodies improved their gross output by 2 per cent 
when actually working 54.8 hours a week, the standard being their 
gross output when working 64.9 hours per week. A further reduction 
of actual working hours to 48.1 resulted in such an improvement of 
hourly output that the gross output was only 1 per cent less than when 
the actual working time was 16.8 hours more. 

A group of 56 men, engaged in the heavy labor of sizing the fuse 
bodies, improved their hourly output by 37 per cent and their gross 
output by 21 per cent when actually working 51.2 hours, the standards 
being the hourly and gross outputs observed when the actual weekly 
hours were 58.2. 

Fifteen youths, engaged in the light labor of boring top cans by 
means of automatic machines, produced only 3 per cent less output 
when their actual weekly hours of work were 54.5 hours than when 
they were 72.5. 

In none of the operations studied was there any change either in 
the nature of the operation or of the type of machinery during the 
period under notice. The data were also chosen as to eliminate any 
possible disturbances due to increasing skill. 

A part of the improvement in output was due to the workers 
starting work more promptly when on shorter hours. At one period 
the women engaged in turning fuse bodies lost on the average 37 
minutes daily by starting work after, and stopping before, the nominal 
time. Nine months later, when their hourly output was 25 per cent 
better, they lost only 26.5 minutes daily in these ways. 

A rest from work on Sunday is followed by a relatively low output 
on Monday, and this output steadily rises in the course of the week, 
owing to the increased efficiency produced by practice. Generally 
the cumulative effects of fatigue neutralize and overpower this 
increased efficiency, and the output may fall after the second day (or 
night) of the working week if the hours are long and the work laborious, 
or not till after the third, fourth, or even fifth day, if the hours are 
shorter. In the absence of a Sunday rest the fatigued worker has no 
opportunity for complete recuperation, and his output, though more 
uniform, remains permanently at a lower level than that shown on 
Monday by a worker who has rested on Sunday. 


HOURS OF LABOR 


361 


Speaking generally, the above data show that a reduction in the 
weekly hours of actual work, varying from 7 to 20 hours per week, in 
no case resulted in more than an insignificant diminution of total out¬ 
put, while on the average it produced a substantial increase. As 
Dr. Vernon points out, the classification of the operations according 
to the possibility they offer for speeding-up production demonstrates 
anew the self-evident fact that the alterations of hours may have very 
different effects in different operations. The exact measure of such 
alterations can not be predicted; it can only be ascertained by obser¬ 
vation and experiment. It appears evident, however, that for pro¬ 
cesses similar to those examined by Dr. Vernon the weekly hours can 
advantageously be reduced to a total of from 50 to 55 hours, and he 
suggests that even lower limits might give an equally good output. 

d) AN INVESTIGATION INTO THE EFFECTS OF SHORTER HOURS BY 
AN AMERICAN EMPLOYERS ASSOCIATION 1 

[Note: The data were secured through questionnaires sent to 
employers in the industries studied.—E d.] 

The results of the investigations clearly show that no single sched¬ 
ule of hours is equally adaptable for all industries from the standpoint 
of production. The evidence is overwhelming that maximum effi¬ 
ciency cannot be obtained in all industries with any single specific 
work-day. 

In general, the ability to increase hourly efficiency and thus make 
up, either wholly or in part, for reductions in hours was largely deter¬ 
mined by the amount of handwork, as distinguished from automatic 
machine work, which is performed in any given process. Thus, those 
industries characterized by a relatively large amount of machine work 
as a rule showed a marked decrease in output when hours were reduced. 

In some types of cotton weaving the machine dominates to such 
an extent that automatic looms run during the noon hour, or for a 
time after the closing hour, without supervision by the operative. In 
work where the machine dominates to anything like this extent, 
obviously the output must be fixed practically by the length of time 
that the machine is run; the opportunity for increased skill or effort 
in handwork cannot possibly make up for the loss in the running time 
of the machine. 

1 Adapted from “The Hours of Work Problem in Five Major Industries,” 
in Research Report of National Industrial Conference Board , XXVII (March. 
1920), 2, 7-8, 9. 


362 


THE WORKER IN MODERN ECONOMIC SOCIETY 


It is necessary, however, to distinguish between operations where 
the machine is virtually or highly automatic and those where the 
machine, however efficient, nevertheless requires the constant super¬ 
vision of the operative in order to secure production. Thus, although 
machine processes have, been developed to a high degree in the boot 
and shoe industry, and although modern machinery is almost univer¬ 
sally employed in that industry, even in comparatively small estab¬ 
lishments, the greater part of the work is essentially “ handtime work.” 
In practically every operation production ceases when the operative 
leaves the machine. Thus, the constant effort and activity required 
of the operative sharply differentiates work in this industry from the 
“machine tending” which characterizes many operations in cotton 
manufacturing, and it unquestionably has an important bearing on the 
practicability of maintaining output when hours of work are reduced. 

Clear discrimination must be made between hourly and total out¬ 
put. A substantial increase in the hourly rate of production when 
hours are reduced may still leave the total output below the previous 
level. 

PROBLEMS 

1. What is meant by the “standard” working week. Does it include (a) 
overtime, ( b ) short time or “unemployment within employment.” To 
what extent do figures of the “standard” working week show the actual 
movements of hours: (1) from year to year, (2) from decade to decade ? 
Is there any distinction between the eight-hour day and the forty-eight- 
hour week, and if so what ? Were the eight-hour day established as a 
maximum by law, would it be possible for employees to work nine hours 
for the first five days in the week in order to have a half-holiday on Satur¬ 
day ? Should the day or the week be the basis for fixing the hours of 
work and why ? 

2. Has labor made more distinct gains as regards the number of hours 
worked per week or earnings during the last thirty years? Try to 
account for this. 

3. John Stuart Mill in his Principles of Political Economy said “it is doubt¬ 
ful if all the mechanical improvements that have been made, have ever 
lightened the day’s toil of a single human being.” Was this a correct 
statement when Mill wrote ? Is it today ? Why ? 

4. “The basic eight-hour day is not a proposal to decrease hours, it is a 
proposal to increase wages.” What is the reasoning behind this state¬ 
ment ? Is it correct ? 

5. “Whether you work by the piece or the day 

Decreasing the hours, increases the pay” 

What is the reasoning behind this jingle ? Trace the argument through 
in detail and state what validity you think it possesses. 


HOURS OF LABOR 


363 


6. “The devil always has work for idle hands to do. Therefore we should 
not try to shorten hours, for such a policy would merely mean more 
patronage for the saloons, the pool-rooms and the gambling houses.” 
What fundamental promises does this argument rest upon and to what 
extent are they correct ? Evaluate this argument in terms of the actual 
experience with shorter hours. 

7. “After all there is not much to be gained from shorter hours. A decrease 
from twelve to eight hours merely means a reduction of one-third in the 
hours of work and a corresponding addition to the hours of leisure and 
one-third is not much.” Criticize. 

8. It has been said that the problems of the future are those of organizing 
leisure time effectively—not primarily those of organizing working time 
effectively. To what extent is this true ? How far can leisure time be 
“organized” and in what ways is it desirable, in your opinion, that it 
should be ? 

9. “Shorter hours results in more production.” Do you agree? To what 
extent and in what degree would your answer depend upon such factors 
as (a) previous length of working day or week, ( b ) nature of work, heavy 
or light, ( c ) degree of repetition, ( d ) handwork or machine-tending. 

10. Summarize the English experiences with the various lengths of the 
working weeks and evaluate the results. 

11. What do you think the experiment with the two battleships proved and 
why ? 

12. The National Industrial Conference Board gathered their material on 
the effects of reduced hours upon output by means of questionnaires 
sent to employers. What do you think of the accuracy of these 
methods ? 

13. Are there any inconsistencies in Mr. Gompers arguments for the eight- 
hour day ? If so, what are they and why ? 

14. “As long as there is one workman unemployed, the hours of labor are 
too long.” What are the assumptions upon which this statement rests 
and the reasoning involved? To what extent is either correct? 

15. “There is no more delusive fallacy than the make work argument. 
For if the workmen reduce the hours of work, this will mean reduced 
production, not the employment of more labor, and consequently will 
curtail the necessities and comforts which these very workmen need.” 
What are the assumptions upon which this statement rests and what is 
the reasoning involved? To what extent is either correct (a) in the 
long run ,(6) in seasonal industries, ( c ) at the peak of the business cycle, 
(1 d) in the slough of the business cycle? 

16. An English labor leader was asked in 1919 what labor would do once it 
had secured the forty-eight hour week. He replied: “We would demand 
the 44-hour week.” “And if you secured that, then what.” “Then 
we would go after the forty-hour week.” “And after that, what.” “ We 
would get thirty-six hours.” “And would you stop then?” “No, we 


364 the worker in modern economic society 


would not rest until we got the hours down to thirty a week.” Comment 
upon this in terms of (a) the attitude toward industry on the part of 
labor, ( b ) the effect of such a program upon production, wages, and the 
private conduct of industry. 

REFERENCES FOR FURTHER READING 

Drury, H. B., The Three-Shift System in the Steel Industry , Bulletin Taylor 
Society, Vol. VI, No. 1, 49 pages 

Federated Engineering Societies, The Twelve-Hour Shift in Industry 
Goldmark, Josephine, Fatigue and Efficiency 
Interchurch World Movement, Report on Steel Strike of 1919 
Lauck and Sydenstricker, Conditions of Labor in American Industry 
Lee, F. S., The Human Machine 

United States Bureau of Labor Statistics, Bulletin 221 , Hours, Fatigue , and 
Health in British Munition Factories; Bulletin 249, Industrial Health 
and Efficiency —The Final Report of the British Health of Munition 
Workers Committee 

United States Public Health Service, A Comparison of an Eight- and Ten- 
Hour Plant 
Walker, C. R., Steel 

Williams, Whiting, What on the Worker's Mind? 


CHAPTER XII 
A WAGE CASE 

The “case” which follows is presented for the purpose of bringing 
into focus in more concrete form some of the issues which have been 
raised through the preceding sections of this chapter. The economic 
and political setting of this particular example of wage adjustment is, 
to be sure, somewhat unique in certain respects, in that the settlement 
is nation-wide in scope, the workmen involved are organized in an 
unusually strong union, and the case is determined by public authority. 
All three of these elements raise certain problems peculiar to them¬ 
selves which must be postponed for fuller discussion in Parts Five 
and Seven. They do not, however, alter the essential validity of the 
case as an illustration of the more important issues which underlie 
all wage determination, namely: the choice of standards by which 
wages are to be judged, the determination of means by which those 
standards can be applied, and the complex interrelation of wage 
problems with those of hours, security, regularity of employment, 
productive efficiency and economy, and the permanent welfare of 
the industry. It is to these issues that attention should be directed 
at this stage. 

THE BITUMINOUS COAL AWARD OF 
MARCH 10 , 1920 1 

The position of the miners .—Acting President John L. Lewis of 
the United Mine Workers of America presented the principal demands 
of the mine workers, as follows (given here only in part): 

1. That there be a 60 per cent increase upon all classifications by day labor, 
tonnage, yardage, and day work in the central competitive field. That, 
of course, carries with it that the basis of understanding reached in the 
central competitive field on the part of the mine workers would be 
satisfactory in all outlying coal-producing districts. 

2. That a six-hour day, five days per week, be established. 

3. That the day labor be paid time and a half for overtime and double 
time for Sundays and holidays. 

Adapted from Award and Recommendations of the United States Bituminous 
Coal Commission , the report of the Commission by H. M. Robinson and R. Peale, 
with a Minority Report by John P. White, Member of the Commission, pp. n, 25-28, 
36-44, 48, 70-76, 80-88. (Government Printing Office, 1920.) 

365 


366 THE WORKER IN MODERN ECONOMIC SOCIETY 

4 That pay days shall be upon a weekly basis. 

• ••••••••••••••*** 

8. That any contract negotiated be effective from and after November i, 

1919, to run for a period of two years from that date. 

A. The Majority Report 1 

Wages .—We have decided to award as a substitute for the 14 
per cent increase previously authorized by Dr. Garfield (former Fuel 
Administrator) a wage increase that is considerably higher. In 
arriving at the present wage award, we were guided by the principle 
that every industry must support its workers in accordance with the 
American standard of living. 

With this principle in mind, we have considered the fact that the 
cost of living has advanced greatly from the pre-war level. Estimates 
of this advance in the evidence before the commission have ranged 
from the 80 per cent, submitted by the operators, through the last 
official report of the Bureau of Labor Statistics, which was 83 per cent 
for October, 1919, and the 86 per cent claimed by the miners in their 
brief with which they stated they would be satisfied as a basis of the 
award, to an even higher figure provisionally estimated by the Bureau 
of Labor Statistics for December, 1919, on the basis of returns which 
are as yet incomplete. 

In addition, we have taken into consideration increases in wages 
received by workers in other industries, as well as other factors herein 
set forth, including the consideration that every cent added to the 
tonnage rate on the annual production means an increase of five million 
dollars in the cost of producing coal, while each per cent of increase 
equals between seven and eight million dollars. 

We hope that there will be a decline in the cost of living in the 
next two years, but we realize that the miners have borne an increase 
above their advance of wages and consider the possible future decline 
in living costs as an offset for these losses. 

On the basis of $1,300,000,000 as the annual value of bituminous 
coal, the labor cost, which constitutes about 57 per cent of the total 
realization by the operators, is about $741,000,000. Twenty-seven 
per cent of this amount is approximately $200,000,000, which is the 
additional sum that will be paid to the miners, as the result of our 
award, above what they were receiving on October 31, 1919. For it 
must be borne in mind that our award is based on the status prior to 

1 By H. M. Robinson and R. Peale. 



A WAGE CASE 


367 


the application of Dr. Garfield’s 14 per cent. The 14 per cent itself 
involved a cost of over $104,000,000 to which our award adds approxi¬ 
mately another $96,000,000. 

Wage advances granted to miners in the central competitive 
district between 1913 and October 31, 1919, average 43 per cent for 
tonnage workers and 76 per cent for day men. The derivation of 
these percentages is shown in detail in Table LXIX. 


TABLE LXIX 
Central Competitive Field 


State 

Percentage 
of Tonnage 

Rates 

1913 

Rates 

1919 

Percentage 
Increase 
over 1913 

Machine: 





Western Pennsylvania. 

19.8 

44.61 

70.00 

56-9 

Ohio. 

22.2 

47.00 

70.00 

48.9 

Indiana. 

14-5 

49.00 

72.00 

46.9 

Illinois. 

43-5 

51.00 

74.00 

45 -i 

Total. 

IOO. 0 

48.56 

72.03 

48.3 

Pick: 





Western Pennsylvania. 

19.8 

64.64 

87.64 

35 - 6 

Ohio. 

22.2 

67.60 

87.64 

29.6 

Indiana. 

14-5 

61.00 

84.00 

37-7 

Illinois. 

43-5 

61.00 

84.00 

37-7 

Total. 

100.0 

63.19 

85-53 

35-4 

Average tonnage rate. 


53-53 

76.62 

43 -i 

Day Men: 





Western Pennsylvania.. 

19.8 

2.84 

5.00 

76.1 

Ohio... 

22.2 

2.84 

5.00 

76.1 

Indiana. 

14-5 

2.84 

5.00 

76.1 

Illinois. 

43-5 

2.84 

5.00 

76.1 

Total. 

, 

100.0 

2.84 

5.00 

76.1 


Tonnage in millions: Western Pennsylvania, 41; Ohio, 46; Indiana, 30; 
Illinois, 90; total 207. 


This table gives the coal tonnage of each of the four states con¬ 
stituting the central competitive field, and the percentage that the 
tonnage of each state is of the total. The table further shows, for 
machine workers, pick miners, and day men separately, the rates in 
1913, the rates in 1919, and the percentage of increase in rates between 
these two dates. In arriving at the average increase for the four 
states, the increase for each is averaged, but in computing this average 























































368 THE WORKER IN MODERN ECONOMIC SOCIETY 


the states are weighted in proportion to their tonnage. For instance, 
Illinois produces nearly twice as much coal as Ohio; therefore, nearly 
twice as many tons of coal are paid for at the Illinois rate as at the 
Ohio rate, and in computing the average for the district, Illinois 
rates are giving about twice as much weight as Ohio rates. The 
weights used for the four states are as follows: 


Western Pennsylvania. 19.8 

Ohio. 22.2 

Indiana. 14.5 

Illinois. 43.5 


As the result of this calculation, it has been determined that the 
average rate for machine work in 1913 was 48.56 cents and in 1919, 
before the application of the 14 per cent, 72.03 cents, while the average 
rate for pick mining was 63.19 cents in 1913 and 85.53 cents in 1919. 
In averaging the rates for pick and machine mining a further weighting 
was necessary. Of the total coal produced in the central competitive 
field 65 per cent is mined by machines, and 34 per cent by hand; 
therefore, the machine-mining rate was given a weight of 66 and the 
pick-mining rate a weight of 34, resulting in an average rate for 
tonnage workers, pick and machine, in 1913 of 53.53 cents and in 1919 
of 76.62 cents. The increase between these two dates for tonnage 
workers was thus 23.09 cents, or 43.1 per cent, while for day men it 
was 76.1 per cent. The average wage advance awarded by us amounts 
to an increase over rates prevailing before October 31, 1919, of 27 
per cent. 

We direct that this increase be apportioned between the different 
groups of workers and classes of work along the following lines: 
That tonnage rates, pick and machine, be increased by 24 cents; 
that rates for all yardage, dead work, narrow work, and room turning 
be advanced 20 per cent; and that the compensation of day men 
also be advanced 20 per cent. All these advances to apply to the 
rate prevailing on October 31, 1919. 

On the basis of this adjustment tonnage workers will receive an 
average increase over 1919 of 31 per cent, while day men whose wages 
were advanced disproportionately under the Washington agreement 
will receive an average increase of 20 per cent. 

Whether all or any part of this amount will be passed on by the 
operators to the public depends on competitive conditions, but we 
estimate that the carrying out of other provisions of our findings 
will save the general public more than the cost of the additional wages. 






A WAGE CASE 


369 


It is to be expected that when all Government regulations are with¬ 
drawn and a competitive market for coal is re-established, the over-ex¬ 
pansion of the industry will not permit the operators to add to the 
price of coal all the increased compensation granted to the miners. 
On the returns made by coal operators to the Bureau of Internal Rev¬ 
enue for the year 1918, we have the assurance that of the 1,551 com¬ 
panies 337, or 22 per cent, reported net losses in 1918, and 168 com¬ 
panies, or 11 per cent, reported net incomes of less than 5 per cent on 
invested capital. 

It is to be expected that companies which were not able to operate 
profitably in 1918, when the demand for coal was unlimited, wilt be 
unable to remain in business in normal times, and that many of the 
companies making net returns of only 5 per cent during that banner 
year will also decide to discontinue operations under competitive 
conditions. 

The two groups of companies reporting net losses and incomes of 
less than 5 per cent constitute about one-third of those for which 
returns are available, but represent only about one-seventh of the 
total invested capital and about one-ninth of the total tonnage. It is 
believed that the nation’s coal requirements can ordinarily be met by 
the operation of those collieries alone which have advantages resulting 
in lower production costs and consequent larger returns on invested 
capital. 

The figures show that 36 per cent of the operators represented, 
having about 62 per cent of the total invested capital and producing 
about 48 per cent of the total tonnage, made net incomes of between 
5 and 25 per cent on their investment, while other companies, still 
more fortunately situated, made even higher returns. The com¬ 
panies, however, that showed net incomes of over 25 per cent repre¬ 
sent in the aggregate less than one-fourth of the total investment and 
two-fifths of the tonnage, while the companies making returns of 100 
per cent or more represent a total investment of only about $4,000- 
000 and a total tonnage of about six millions. 

The average returns of all the reporting companies were 18.86 
per cent on the investment before payment of the income and excess 
profits taxes and 9.72 per cent after deducting the taxes. 

We believe that the law of supply and demand will result in a 
competition for markets and will not permit the operators to shift all 
the wage advance to the public. The bulk line, which during the 
war was placed by governmental authority high enough to stimulate 


37o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


maximum production, will move lower in response to economic forces 
when normal conditions are re-established and the price will be 
prevented from rising beyond a point sufficient to assure the nation of 
its coal requirements. This forecast is based on the assumption that 
no combination to maintain prices can be formed among the operators. 
Such a combination besides being illegal seems quite impracticable 
in view of the 7,000 companies involved located as they are in some 
26 or 27 coal-producing states. 

We have evidence that the share of labor in the total price paid 
by the public for coal was greater in 1916 and in 1917 than in 1918 
for 'most of the important producing districts. Hence the advance 
granted by this commission will tend to re-establish the pre-war distri¬ 
bution of each dollar paid for coal as between capital and labor. 

The increase will thus in no way be a further step in the circular 
ladder of more wages—higher prices—increase in the cost of living— 
still more wages. Even if it were established that this sequence of 
events obtains throughout industry, yet the question would remain 
whether it is fair to single out one group of workers as the victims 
of an attempt to check the operation of the vicious circle. 

In the case of the coal industry conditions are such, as a result of 
over-expansion, that higher labor costs will tend to force the readjust¬ 
ment under which the national needs will be met from more eco¬ 
nomically operated properties. This readjustment will be to the 
advantage of the coal-mining industry as a whole, and is urgently 
required in the interests of national economy under the present 
circumstances. It is the true method of stabilizing the coal industry 
and providing for the more continuous employment of the capital 
and labor involved. 

IRREGULARITY OE EMPLOYMENT AND THE SHORTER WORKING DAY 

The six-hour day and the five-day week. — We have gone fully 
into the mine workers’ demand for a six-hour day and a five-day week, 
equivalent to a reduction of working hours from 48 to 30 per week. 

It is claimed by the miners on the basis of experience after previous 
reductions of hours of labor and of the effects of reduction of hours 
in other countries, that curtailment of working time would not reduce 
the output in anything like a corresponding proportion. It is our 
view that arguments based on the effects of a reduction from 10 to 8 
hours can hardly apply to a reduction from 8 to 6 hours, or from 8 to 7 
hours. Production in countries where there has been a reduction in 
hours is less than before the hours were reduced. We feel that our 


A WAGE CASE 


371 


responsibility to the nation will not permit us to make an award that 
would curtail appreciably the productivity of the workers in a basic 
industry. 

Each coal company endeavors to have enough men on its rolls to 
carry it over the peak of the rush season; the operators want coal 
mined while there is a demand, each company realizing that, if it is 
unable to satisfy its customers, they will turn to other producers 
and the sale will be permanently lost. A labor supply, sufficient for 
the needs of the rush season, is excessive during the rest of the year, 
part-time employment results, and the nation will ultimately have to 
pay in its fuel bills the cost of maintaining this larger army of only 
partially employed workers. 

We are convinced that a reduction in hours of labor would only 
make a bad situation worse, that the miners’ demand on this point 
is clearly uneconomic, and that to grant it would be detrimental to 
their own interests. 

Another result that would flow from a reduction in hours, with the 
wages that it is proposed should be paid, will be to increase the number 
of men who will seek employment at the mines on account of the 
shorter hours and the full pay, and this, in turn, will result later in 
further demands for the shortening of hours in order to give employ¬ 
ment to the men who would thus be added to an industry that is 
already overmanned. We cannot, in view of our responsibilities 
agree to a demand that would lead to such disastrous results. At the 
same time we hope to accomplish something in the direction of the 
stabilization of the industry by means of constructive proposals 
discussed elsewhere in this report. 

Therefore, our conclusion is that, under all the conditions, the 
eight-hour day should be maintained. 

Intermittency in working days .—Irregularity of mining operations 
is the primary cause of the unsatisfactory condition of the industry 
and results in high prices of coal and dissatisfaction among the miners. 

The principal causes of this irregularity are the seasonal character 
of the market and the inadequacy and irregularity of car supply. 
In order to stabilize the industry and alleviate the irregularity of 
the market, we feel that the purchasing and consuming public on the 
one hand, and the carriers on the other hand, have certain specific 
duties to perform. 

It is evidently the public’s duty to aid in the stabilization of the 
coal market by purchasing and arranging to store as much coal as 
possible during the spring and summer. It is the carrier’s duty to 


372 


THE WORKER IN MODERN ECONOMIC SOCIETY 


furnish as much equipment as possible for the movement of coal, 
and, above all, to see that there is no discrimination in the distribution 
of the equipment which is now at their disposal. 

In considering these facts, we had in mind the two basic principles: 
(i) That a seasonal demand develops a seasonal price, which is a 
double charge against the consumer, since this price must be high 
enough to carry the expenses of the dull period and also high enough 
to carry the extra expenses of additional equipment needed to handle 
the business in rush periods. (2) That seasonal idleness breeds 
unrest in any group of men and in any industry. 

The coal industry is a part-time industry, the number of idle 
days, out of a possible 308 working days, being 63 in 1918 and 115 in 
1919. On the average for the past 30 years, the number of possible 
working days, when the mines were not in operation, was 93. This 
loss of time may be analyzed by causes for the last two years 
in Table LXX. 

TABLE LXX 


Cause of Idle Time 

1918 

1919 

Car shortage. 

Per Cent 

49 

23 

14 

8 

6 

Per Cent 

17 

25 

6 

50 

2 

Labor shortage and strikes. 

Mine disability. 

No market. 

Other causes. 



While coal production increases in accord with national develop¬ 
ment on an average of approximately 10 per cent per year, yet coal 
production in normal times varies from year to year with general indus¬ 
trial conditions. Periods of prosperity and great activity are marked 
by a large production of coal, since fuel is the foundation of all indus¬ 
trial enterprises, while years of depression are also low-ebb years in 
coal mining. 

In only a few instances, however, does the industry show a loss 
of time below 78 working-days in a year, so that it is a fair interpreta¬ 
tion of the facts that many days of idleness occur in the industry 
regardless of the general level of industrial prosperity. This amount 
of lost time may be ascribed to two main causes: (1) over-development 
of the industry, and (2) irregular distribution of the demand for coal 
through the year. This results in periods of, no market, when mines 
and railroad cars are idle because of a shortage in demand for coal, 















A WAGE CASE 


373 


followed by periods of great demand, when mines would be worked 
to capacity were it not for the lack of coal cars for the transportation 
of the product. At the present time America requires less than 
500,000,000 tons of bituminous coal a year, while the capacity of the 
mines in operation is over 700,000,000 tons. 

Under the stimulus of war demand many new mines were opened 
and many old ones expanded in order to secure sufficient coal to meet 
th'e exceptional and urgent national requirements. As a result, the 
coal industry, which was speculatively overdeveloped before the war, 
is still more overdeveloped now and employs more capital and more 
labor than is necessary to supply the present needs of the country. 

It is not to be expected that exports of coal will increase sufficiently 
to absorb a perceptible proportion of the gap between the demand 
for coal and the capacity of mines, as our shipping terminal facilities 
are such that not more than 25,000,000 tons of coal a year can at 
present be expected. 

Full-time employment in the coal mines cannot, therefore, be 
expected until the industry is put on such a basis that only those 
mines remain in operation whose output is required to supply the 
annual needs of the country. 

Even if the overexpansion in the industry were remedied there 
would still be a considerable amount of irregularity in operating time 
so long as the demand for the bulk of the coal remains concentrated 
in certain months, with idleness of cars during the slack months and 
shortage of cars during the peak months. 

[There follows a discussion of the possibilities of consumers’ 
co-operation in improving storage facilities and regularizing demand, 
with a statement that certain large consumers have already promised 
such assistance.—E d.] 

Introduction of labor-saving devices and machinery .—The United 
Mine Workers, through their president, fully accept in principle the 
desirability of the introduction of machinery and mechanical devices. 

The statistics before the commission show that 57 per cent of 
the country’s total production of bituminous coal is machine mined. 
It is recognized by the commission that the introduction of machinery 
and devices can be prevented by the mine workers by failure to agree 
upon the rates, terms, and conditions under which the machinery 
and devices are to be used. We recommend that the good offices 
of the miners’ international organization be exercised to maintain the 
principle that has been so fully presented in behalf of the mine workers. 


374 


THE WORKER IN MODERN ECONOMIC SOCIETY 


After a device or machine shall have passed the experimental 
stage and is in shape to be introduced as a regular component part of 
the production of coal, then for the purpose of determining a permanent 
scale of rates for operating such device or machine the mine workers 
may have a representative present for a reasonable time to witness 
its operation, after which a schedule of rates shall be determined by 
mutual agreement, which scale shall be concluded within 60 days 
after a fair test has been made. 

B. The Minority Report 1 

Wages .—The joint report predicates its calculation of what it 
deems a fair wage award upon the rise in the cost of living as estimated 
in a preliminary figure of the United States Bureau of Labor Statistics, 
namely, 97 per cent increase since the pre-war period up to December, 
1919. They say, further, they “were guided by the principle that 
every industry must support its workers in accordance with the 
American standard of living.” Unfortunately, this increase of the 
majority report, even if granted—and we show later it is not—does 
not conform to any known standard of living except one that is neces¬ 
sarily degraded and debased, because the pre-war wages of the mine 
workers were inadequate for comfort and decency, and the joint 
report makes no attempt to show that the awarded rates will enable 
the recipient to earn a wage sufficient to maintain himself and family 
above the poverty level. The mine workers submitted data from 
Government sources and from prominent experts, all pointing to the 
necessity of at least $2,000 per year, whereas the proposed increase 
will bring the yearly earnings that may be expected up to an average 
of only $1,000 to $1,300 and a maximum of only $1,600 to $1,700. 

We object to this method of wage determination, for two reasons: 
First, because it results in perpetuating all the old hardships and suf¬ 
fering attendant upon an inadequate wage; and, second, because it 
makes no allowance for the fact that during the past two and three years 
the mine worker has been obliged to curtail his standard of living on 
account of prices soaring far above the purchasing power of his wage. 
It is true the report makes mention of this in the following terms: 
“We hope that there will be a decline in the cost of living in the next 
two years, but we realize that the miners have borne an increase 
above their advance of wages and consider the possible future decline 
in living costs as an offset for these losses.” 

1 By John P. White, Commissioner. 


A WAGE CASE 


375 


In other words, the report sets a “hope” before the mine workers 
as sufficient recompense for actual monetary loss in the past. With all 
the objections that exist, however, the mine workers would be willing 
to accept gracefully this method of procedure, if the calculation and 
the apportionment of the increase were to be properly made. 

There are two errors into which the joint report has fallen in the 
calculation and apportionment of its wage increase. In the first 
place, the weighting chosen is upon the tonnage basis, instead of upon 
the man basis; and in the second place, the day workers, who have 
received the larger increase heretofore, are utilized to depress the 
average increase due to pick and machine miners, and then are not 
themselves awarded even the increase as thus depressed. 

We make no special criticism upon averaging respective increases 
that have heretofore been received in the four fields of western 
Pennsylvania, Ohio, Indiana, and Illinois on the tonnage basis, 
and we accept the figures of the joint report for the average increases 
in the central competitive field that have been received, respectively, 
by the machine miner, the pick miner, and the day worker. These 
increases are: 

Percentage 


Machine miner. 48.5 

Pick miner. 35.5 

Day worker. 76.1 


However, when it is sought to combine the increases of the machine 
and the pick miner, obviously the weighting chosen should be on the 
basis of the number of men actually employed at the two occupations, 
and not upon the number of tons produced by the two methods. 
This wage determination is intended to fix the compensation to he paid 
to human beings, to enable them to support life in such a manner that 
they will be a credit to the country. The number of tons of coal that 
these human beings are able to produce should not be allowed to be 
a determining factor, though it is doubtless important. A coal¬ 
mining machine is able, on the average, to produce about 17,000 
tons of coal per year. The production per employee is considerably 
less than 1,000. If, then, the figures are weighted on a tonnage 
basis, the machine is made the dominant factor, far outweighing 
the man. 

. Below is given in parallel columns the effect of these two systems 
of weighting upon the increases that have been received since the 





376 THE WORKER IN MODERN ECONOMIC SOCIETY 


pre-war period (1913). (Compare the discussion of the majority 
report on pp. 367-68 with accompanying table.) 

Weighting on Tonnage Basis Weighting on Man Basis 

Machine miner. 66% of 48.5%... .32.01 23% of 48.5%.. 11.16 

Pick miner. 34% of 35.5%-12.07 77 % of 35 - 5 %•• 2 7-33 

100% 44.08 100% 38.49 

The effect of this difference is seen when the miner is combined 
with the day man. (At this step the joint report uses the man basis, 
though here again the mine worker receives the worst of it owing to 
the excessive weight placed upon day men—36 per cent instead of 
the correct 30 per cent.) The joint report states that the average 
increase already received for all employees combined is 55.61 per cent. 
The proper weighting on the man basis reduces this figure to 52 
per cent and if the proper distribution of miners and day men is 
adopted the figure will be 50 per cent. This means that the increase 
to be awarded, if it is done on this basis, should be, not 27 per cent 
as claimed by the joint report, but 31 per cent, and the increase in 
tonnage rates should be not 24 cents per ton but 27 cents per ton. 

The living wage .—The proposal of Messrs. Robinson and Peale for 
a 27 per cent increase in wages is based upon the idea that such an 
increase will restore the prewar status of the mine worker. This 
results in a gross injustice, as pointed out in the preceding section, to 
those employees whose wages had been little increased between 1914 
and 1919. Thus the pick miner, who previously had been the basing 
occupation in making wage increases, received an increase of only 
35.5 per cent between 1914 and 1919. The proposed additional 
increase of 27 per cent would give the pick miner a total increase of 
only 72 per cent over his 1914 rate, an increase far below the increased 
cost of living as accepted by Messrs. Robinson and Peale themselves. 
It is absolutely no solace to the pick miners, under such circum¬ 
stances, to be told that the average increase for all mine workers had 
been as great as the increase in the cost of living, any more than it would 
be to a street car conductor to be told that even though he received no 
increase in wages, the average earnings of street car employees had 
enormously advanced, owing to large advances granted the motormen. 
Each man must live on the opportunity of earnings within his own 
occupation. 

But even if these inequalities had been adjusted and every occupa¬ 
tion had been restored to its prewar earning capacity, the mine workers 








A WAGE CASE 


377 


would not feel that full justice had been done. For the primary 
demand of the mine worker before this commission was not for a 
restoration of prewar conditions, their primary demand was for a 
living wage—a wage which would permit the average mine worker 
to maintain his family in health and decency; to live in modest 
comfort as regards housing, food, and clothing for his wife and children; 
to enjoy some of the minor pleasures of living; to set aside some 
little of his income against old age and disability; to live, in other 
words, according to the accepted standards of an American citizen. 

We are highly gratified to note that Messrs. Robinson and Peale, 
in their report, recognize the justice and righteousness of this demand. 
They state that in arriving at their proposal they “were guided by 
the principle that every industry must support its workers in accord¬ 
ance with the American standard of living.” Thus our contention is 
conceded as fully and expressed as well as we could desire. The 
disappointment is that the concession is merely in words. The 
principle is granted but no attempt is made to apply it. Instead, 
the wage proposal is based, as noted above, on the idea that justice 
may be done by restoring unjust conditions of the past. 

In the light of modern principles we find that even if the miners 
are granted sufficient increases to keep pace with the rising cost of 
living, the resulting rates would fall far short of the measure of justice. 
The mere maintenance of the old earnings would mean the necessity 
of continuing the practice of putting children and young persons to 
work, of bringing lodgers into the home in order to supplement the 
inadequate earnings of the head of the family. 

[There follows a series of citations from various studies of wages 
in relation to cost of living, designed to prove the inadequacy of the 
pre-war miner’s wage.—E d.] 

It is clear, therefore, that an increase of 27 per cent in present 
wage rates would fall far short of raising these workers to a level of 
health and reasonable comfort. 

IRREGULARITY OF EMPLOYMENT AND THE SHORTER WORKING DAY 

The relationship between production and the problem of irregularity .— 
We agree fully with the statement of the majority report concerning 
the importance of irregularity of mining operations as a cause of 
unsatisfactory working conditions as well as of high prices. The 
fundamental importance of this phase of the subject was ably stated 
by Mr. Herbert Hoover in his inaugural address before the American 


378 THE WORKER IN MODERN ECONOMIC SOCIETY 


Institute of Mining and Metallurgical Engineers, February 17, 1920, 
in which he said: 

Many of the questions of this industrial relationship involve large 
engineering problems, as an instance of which I know of no better example 
than the issue you plan for discussion tomorrow in connection with the soft- 
coal industry. Broadly, here is an industry functioning badly from an 
engineering and consequently from an economic and human standpoint. 
Owing to the intermittency of production, seasonal and local, this industry 
has been equipped to a peak load of 25 or 30 per cent over the average load. 
It has been provided with a 25 or 30 per cent larger labor complement than 

it would require if continuous operation could be brought about. 

There lies in this intermittency not only a long train of human misery 
through intermittent employment, but the economic loss to the community 
of over 100,000 workers who could be applied to other production, and the 
cost of coal could be reduced to the consumer. This intermittency lies at 
the root of the last strike in the attempt of the employees to secure an equal 
division among themselves of this partial employment at a wage that could 
meet their view of a living return on full employment. 

This states the gist of the whole problem. The question of a 
living wage cannot be considered apart from the problem of securing 
the mine worker enough days of employment to enable him to earn 
such a wage. 

Thirty-hour weekly average cannot he increased by regularizing 
market .—To put the matter most charitably, the majority report 
shows great inconsistency in that, while recognizing the inability of 
the market to absorb full production, it still implies that a solution 
can be reached by regularizing the market. In other words, the 
presumption is that unemployment can b„e eliminated by being 
distributed. The casual reader of the majority report will undoubt¬ 
edly assume that regularization of the market will provide full-time 
employment for the mine worker. This would be a gross misapprehen¬ 
sion. For a study of the best available material shows clearly that 
had available labor been utilized to a reasonable extent during the 
year following the armistice the output would have been far in excess 
of the market demands. Mr. Francis Peabody, who was chairman 
of the coal committee of the Council of National Defense during the 
war, recently stated to a Senate committee that the total cost of 
production of coal, as well as the earnings of the miner, depends 
entirely upon continuous work, and that the cost of his mines is 
affected by irregular operation to the extent of between 50 and 60 
cents a ton. Commenting further on the existing irregularity of 


A WAGE CASE 


379 


operation, Mr. Peabody makes the striking statement that the physical 
capacity of the mines themselves throughout the United States is 
sufficient to produce 40 per cent more coal than the possible demands 
of the country. 

This may be expressed in another way. With an average of 30 
hours of operation per week the industry can meet all the requirements 
of the normal market. This is no hypothesis. It is based upon the 
figures given in the weekly reports of the United States Geological 
Survey. The extraordinary demands of the war years were met with 
an average operation of between 30 and 40 hours per week, the 
highest figure being under 42 hours per week; while the normal needs 
of the country for the year following the armistice were met by an 
actual operation averaging under 30 hours per week. In other 
words, the voluminous suggestions for regularizing the market put 
forward in the majority report will amount to a regularizing of the 
30-hour week, or to an award of a 5-day week, with 6 hours per day. 

But there lies the evil of the suggestion carried in the majority 
report. While actually recommending readjustments which will mean 
such a regularization of the 30-hour average week actually necessary to 
meet the production requirements, it avowedly awards a 48-hour week 
and of course bases its wage award upon that number of working hours. 
In other words, while verbally accepting the principle of the living 
wage, it actually fails to afford the worker an opportunity to earn 
this living wage which is based upon a hypothetical 48-hour week. 
This arrangement of the award closely approximates hypocrisy. 
For it will lead the public to accept the wage award as just on the 
supposition that the bituminous mine worker will have an opportunity 
to work as many hours per week as his fellows in other industries: 
a supposition which we have shown by elaborate statistics, drawn 
from the most authoritative sources, to be utterly false. What does 
this suggestion of the majority report then mean ? It means simply 
the regularizing of unemployment , its distribution throughout the year 
so that it will be less noticeable. 

It is because the wage award suggested in the majority report 
will be conceived and judged upon the basis of a 48-hour week that 
we wish to stress the present improbability of a week of more than 30 
hours whatever the award may say. This discrepancy between the 
week actually awarded and the week which will be worked is the true 
measure of the unfairness of the award. For it is a measure of the* 
amount which the mine workers will apparently receive and will not 


380 THE WORKER IN MODERN ECONOMIC SOCIETY 


actually receive. It is this failure of the majority report to deal with 
actual conditions that requires comment. If the American mine 
worker produced only as much coal as his fellows in other countries, 
he would have full employment, for it would require more hours to 
produce the amount required by the country. As it is, the American 
mine worker produces more tons per year than his fellow in any other 
country in the world. This is clearly substantiated by data compiled 
by the United States Bureau of Mines. And his great productivity 
brings him not shorter hours with correspondingly higher pay, in order 
that he may earn a living wage, but unemployment and an accident 
death rate twice as high as the average for these same other countries. 

In the face of these facts we feel that the request that the actual 
facts of the industry be recognized and that the wage increase be 
related to the fact that an average week of 30 hours will produce all 
the coal required by the country is fundamentally just. Failure to 
face a situation in which 30 hours a week will be averaged whether it is 
officially sanctioned or not is merely juggling with solutions in order to 
avoid the true issue. 

The request for the recognition of a shorter working day has been 
misrepresented as a movement for the reduction of the working 
period, when in reality it is a request for recognition of what actually 
exists and the adjustment of wages on that basis. With inadequate 
rates of pay in the face of lack of opportunity to work, the position 
of the mine worker has grown desperate. 

The cost of excessive capital when unemployed. —The majority 
report has carefully provided that labor shall be paid on the sup¬ 
position that it works an average 48-hour week, and the public 
will call it a fair wage on that basis. The difference between the 
hypothetical 48-hour week and the actual average 30-hour week 
represents a part of the year for which the majority report makes 
no provision so far as labor is concerned. On the other hand, it 
ignores the fact that the nation is called upon to pay profits and 
maintenance to capital on the basis of its normal employment being 
a 30-hour week. Capital is to get its full normal remuneration, 
although it works but 30 hours per week on the average. That is 
to say, the majority report tacitly awards the companies a 30-hour 
week while denying it to the mine workers. 

The conclusion drawn by the operators was that if the country 
needed the mine workers only 212 days out of the year, it was under 
no obligation to pay them a living wage for the full year. Let the 


A WAGE CASE 


38i 


mine worker go out and find a job somewhere else. In other words, 
the speaker implied that the public was under no obligation to give 
the mine worker sufficient annual earnings to maintain his family 
for a full year when it only needed his services for three-quarters of 
a year. 

This, of course, led naturally to a similar question in regard to 
the capital invested in the industry. Was the public under any 
obligation to maintain this capital, whether it worked or not ? In 
other words, if a 30-hour week, as actually worked during 1919, was 
not to be recognized for the mine workers, should it in equity be 
recognized for the companies? For, obviously, when’the mines 
were idle the capital invested in the mines was no more serving the 
public than were the mine workers. And yet, as a result of careful 
analysis of financial returns, found in the reports of the companies 
and in the report of the Federal Trade Commission, the interesting 
discovery was made that in paying the regular price for coal the public 
is paying the coal companies over $100,000,000 each year for periods 
when the companies are doing nothing for the public; that is, for 
periods when the public does not need their services. This is not the 
whole amount paid to capital in the coal industry during the year. 
It is only the amount paid for maintenance and profits during the 
actual days of idleness; for capital invested in the coal industry 
expects the public not only to maintain it—that is, to pay its expenses 
■—during these periods when it is unemployed, but also to pay profits 
for no services at all. 

The earnings of the wage earner are not given exclusive of the cost 
of maintaining himself and family. The question of a fair return to 
the worker is not based upon his profit over and above what it requires 
to maintain him as a serviceable member of industrial society. Apply¬ 
ing this to capital invested in the coal industry, the full wage must 
naturally include maintenance, depreciation, and depletion charges, 
as well as the interest and dividends paid on stocks and bonds. The 
question raised by the operators was, therefore, found to involve 
the question whether the nation is under any obligation to continue 
this wage to capital whether it works or not. 

The exhibit presented by the mine workers shows that in the cost 
of each ton of coal are items of overhead and profit which continue 
whether the mines are working or not. Taking these items only for 
the period when the mines were idle in 1917, it was found that for 
this period of idleness the public paid the coal operators approximately 


382 


THE WORKER IN MODERN ECONOMIC SOCIETY 


$144,000,000; that is, $225 per man employed. In the following year 
the total paid to maintain invested capital in idleness was approxi¬ 
mately $128,000,000, or $200 for each man employed. And it must be 
remembered that none of this went to the mine workers, and that they 
were, during these periods, without opportunity to earn a wage. 

In view of these facts, the answer to the question must apply to 
capital as well as to labor, to the companies as well as to the mine 
workers. Should it be decided that the public is under no obligations 
to maintain its servants during periods when they are not actually 
serving, it would immediately be clear that when the public pays only 
for the maintenance of the companies during the portions of the year 
when they are actually working, there will remain over a very large 
annual fund out of which may be met the cost of the living wage 
asked by the mine workers and of the shorter working day as a means 
to greater regularity. 

RELATION OF LABOR COSTS TO TOTAL COSTS, PROFITS, AND 
PRICES IN THE BITUMINOUS COAL-MINING INDUSTRY 

A survey of the coal-mining industry demonstrates conclusively 
the fallacy of the assumption that wage increases have been the 
primary factor in the advance in the price of coal over prewar prices. 
It is equally erroneous to assume that the proposed wage increase 
now under consideration for bituminous mine workers must necessarily 
be followed by a corresponding increase in the cost of coal to the 
consumer. The utter falsity of this position is clearly shown by a 
review of the Federal Trade Commission’s recent report on the coal 
industry and other official data bearing on the production and distribu¬ 
tion of coal. 

An examination of these data shows that the increase in the retail 
price of bituminous coal since 1916 has been from three to four times 
as great as the increase in labor costs during the same period, and that 
the operator’s share in the proceeds of the coal industry has increased 
from 75 to 400 per cent, while the distributive share of labor has 
actually decreased. 

In the central Pennsylvania coal field, for example, out of every 
dollar received by the operator in 1916 for his coal, 66 cents went to 
labor, while 6 cents was retained by the operator as his profit. In 
1917, labor received only 46 cents out of each dollar, while the operator 
retained 32 cents. This was a decrease in labor’s share of 30.3 per 
cent, and an increase in the operator’s share of 433.33 P er cent. In 


A WAGE CASE 


383 


1918, labor’s share of each dollar was 35 cents, a decrease over 1916 
of 16.7 per cent, while the operator’s share was 25 cents, an increase 
over 1916 of 316.7 per cent. 

Again, in the southwestern field, labor’s share of the dollar in 
1916 was 60 cents, and in 1917 it was only 39 cents, a decrease of 35 
per cent, while the operator’s share in 1916 was 13 cents, and in 1917 
it was 42 cents, an increase of 223 per cent. In 1918, labor’s share 
was 55 cents, as against 60 cents in 1916, a decrease of 8.33 per cent, 
while the operator’s share was 24 cents as against 13 cents in 1917, 
an increase of 84.6 per cent. 

Thus, there are established the following facts: (1) that increased 
coal prices were not due to increased labor costs, but on the contrary, 
were due largely to increased profits exacted by the operators; and 
(2) that increased wages to labor were more than offset and rendered 
less than negligible by the increased efficiency and increased produc¬ 
tivity of labor. 

PROBLEMS 

1. What “principles” does the commission follow in making its award? 
Do you consider them valid ? Why or why not ? 

2. Does the minority report object to the award chiefly on questions of 
principle or on questions relating to the way the principles are applied 
in this case ? Analyze carefully. 

3. Are there any differences as to the use of factual data? 

4. What questions relating to the productive organization of the industry 
are raised by the award ? 

5. How is the wage increase likely to be paid for: through increased produc¬ 
tivity, by the operators, or by the public through higher prices ? Suppose 
the latter. Should the increase be granted ? 

6. What is the essential contention of the miners regarding the calculation 
of their incomes on an annual basis ? What do you think of it ? 

7. With which report do you agree in the main: that of the majority or 
the minority ? If you agree with neither, can you suggest an alternative 
solution ? 


I 


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X 




































PART FOUR 


SECURITY AND RISK 















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INTRODUCTION 


The subject of this part finds its genesis to a great extent in 
the changes wrought by modern industrialism. That the changes 
attending the passing from simple to complex industry have in many 
cases meant security to the worker cannot be doubted. Yet there is 
also a story to be told of new fears and risks that have arisen or old 
ones that have been greatly intensified. Modern production and the 
work of the machine-tender involves many and serious accidents, 
disease arises as a consequence of handling unhealthful substances, 
workers fall sick and become liable to lose their step in the economic 
process, the drive of the machine threatens to bring on industrial 
old age before a competence for the declining years has been provided, 
and a thousand and one factors raise a constant threat that unemploy¬ 
ment may be the lot of workers at a time when they can little afford 
to be idle. 

It is the purpose of this part to examine into the extent to 
which security, on the one hand, and fear and risk, on the other, are 
the lot of the worker; to appraise the consequences of this state of 
affairs; to seek for its causes; and to become acquainted with some 
of the more common devices that have been proposed for diminishing 
the worker’s risks. 


387 


CHAPTER XIII 

GENERAL CONSIDERATIONS 


i. SECURITIES IN MODERN ACHIEVEMENTS 

AND METHODS 1 

Security of life. —One of the outstanding securities possessed by 
the worker today is a relative immunity from famine and disease. 
The wonderfully improved means of transportation have brought the 
products of the areas having a surplus to the very doors of the areas 
suffering from scarcity, and the no less marvelous improvements in 
medical knowledge have rendered the recurrence of the plagues of 
the Middle Ages unthinkable. “It was not for nothing,” says 
L. C. A. Knowles in The Industrial and Commercial Revolutions in 
Great Britain during the Nineteenth Century, “ that the English Prayer 
Book has two special prayers against famines, two against scarcity 
arising from excessive rain, and a petition in the Litany to be delivered 
from plague, pestilence, and famine.” The medical practitioner of 
1775 was confined largely to the exercise of two remedies, bleeding and 
the administration of a physic. Within the short span of a century 
and a half the medical profession has passed through a series of develop¬ 
ments until today training is no longer given as a rule by the master 
teaching his neophyte as he goes the rounds of his patients, or by 
institutions motivated chiefly by the desire for profits, but by endowed 
or state-supported medical schools whose attitude and approach is 
purely scientific. 

The utilization of steam in transport has made it possible to throw 
a network of railroads over the continents and to convert the ocean 
from an impassable barrier to a beckoning highway. It follows that 
if the wheat crop fails in the United States, the harvests of Argentina 
or India can supply the deficiency. There is a whole world today 
to draw upon, and this fact means that the worker has a security 
against famine never previously enjoyed. 

Security through participation in government. —Formerly govern¬ 
ment was in theory and fact the concern of the few. Today, although 
the actual functions of government are still exercised by a small 

1 Prepared by Willard E. Atkins. 


388 


GENERAL CONSIDERATIONS 


389 


group, the possession of the ballot by the worker is likely to make 
these rulers conscious of the fact that the power they hold is delegated. 
True, the worker may be characterized as both blind and somnambu- 
lant; yet he is a giant the possibility of whose awakening causes his 
interest to be treated cautiously and sometimes with solicitude. 

Security through education .—Another security is seen in the 
universalizing of education. The worker’s share in education has, 
to be sure, been limited by his occupational restrictions and confined 
largely to the more primary matters. But the ability to read and 
write has tended to limit his exploitation, and has afforded him some 
measure of self-expression and the means of co-operation with his 
fellows. Perhaps it is not making too strong a statement to say that 
education is the worker’s greatest leverage for overcoming the handi¬ 
caps imposed because of lack of property, family position, and control 
over the conditions of his employment. 

Security through expanded production .—Contributing to the 
security of the worker is the technical efficiency of machine society 
in producing vast quantities of want-satisfying goods. But, someone 
may object, of what avail is it to increase the amount of consumable 
goods if population in industrial society tends to increase in the same 
or even in an accelerated ratio, or if the increase in the sum total of 
goods produced is not accompanied by corresponding improvement 
in the distribution of these goods to assure the worker a proper share 
in the potential comforts and pleasures which these goods represent ? 
It is true that a large increase in population has accompanied 
the transformation of agricultural nations into industrial nations. 
But much of this increase is due to immigration from other areas 
and to greater conservation of human life, particularly the reduction 
of infant mortality, rather than to a proportionate increase in the 
birth-rate. Moreover, there is considerable evidence that advertising 
and the subtle suggestion of still higher accessible standards of living 
tend to limit the willingness of human beings to assume the burdens 
of unlimited families. The propaganda for particular methods of 
birth control has probably accomplished much less than the realization 
that unlimited propagation nullifies the very gains made possible 
through desire-creating mechanisms. To the second objection, that 
unequal distribution may prevent the worker from sharing in the 
increased total of want-satisfying goods produced, it should be 
observed that such growing devices as inheritance and income taxes 
built upon a progressive base, the fast growth in city, state, and 


39° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


national concern for common access to education, playgrounds, art 
galleries, etc., and the assurance of certain minimums in wages, 
safety, and health—all tend to secure a direct distribution of wealth 
upon a more equal basis or to distribute it indirectly by making the 
more fortunate pay the costs of providing through state activities for 
the welfare of the mass. 

Security through mass action. —Additional security is gradually 
becoming a fact through the campaigns to prevent accident, stabilize 
employment, and, where a loss cannot be avoided, to meet it through 
various systems of insurance whereby the direct or indirect difficulty 
of the individual is provided for by contributions from the mass. 
Under this heading can be suggested campaigns like the “safety first” 
movement, legislation providing safeguards for workers, studies in 
the prevention of unemployment and occupational disease, and 
various forms of insurance to meet the burden of ills which cannot be 
prevented which include various forms of insurance against accidents, 
unemployment, dependent old age, sickness and occupational disease. 

Security through class consciousness. —These securities of mass 
action have been greatly abetted by class consciousness. It is the 
recognition of the solidarity of class interest which has made large 
groups of organized workers willing to contribute to the support of 
smaller local groups or isolated individuals which may be dependent 
for example, because of strikes, sickness, death, or unemployment. 
It is true that some of the securities which we are here discussing are 
at times afforded by the state or even by the voluntary action of 
employers. 

However, it may be objected that class consciousness leads to 
the insecurities resulting from industrial conflict. In one sense, 
this is true; but the larger effect of this conflict seems to be the defining 
of issues and the forcing of new social arrangements which, on the 
whole, have favored the worker in such matters as hours of labor and 
conditions of employment. 

Security through ethical standards. —Modern workmen appear to 
be more secure through the development of ethical standards. It is 
true that the earlier era of concentrated, impersonal machine indus¬ 
try destroyed both the claim on the employer and the claim on 
the community which the manorial worker possessed. Spontaneous 
aid to a sufferer has become less easy in the sharply competitive and 
commercial city. Yet the power of the state is gradually being evoked 
to protect women and children, and workers in extra-hazardous 


GENERAL CONSIDERATIONS 


391 


occupations. Housing programs and regulations, free libraries and 
clinics, all point toward the increasing socialization of property. 
Codes of professional ethics have been developed to safeguard particu¬ 
larly the less fortunate from the prosecutions of shyster lawyers, the 
purveyor of fraudulent securities, and the medical quack. Growing 
respect for human beings as human beings has been reflected in the 
appeals for guaranties of minimum standards of living, the breaking 
of caste barriers to education, the abrogation of cruel and unusual 
punishment, and theories and procedures designed to secure to all 
equality before the law. 

Security through method and spirit of science .—Finally it may be 
said that underlying all these securities of the modern worker is the 
scientific method itself, the method of fearless investigation and applica¬ 
tion which assumes that all phenomena lie within the sphere of man’s 
potential knowledge and possible control. The complexities and 
interdependence of industrial society resulted from the interaction of 
forces which, once set in motion, society has been powerless to stop 
and, as yet, powerless to control. Innovations have met and mingled 
with other innovations in ways which no one foresaw or intended. 
But though most of the larger changes occurred unconsciously and 
unintelligently, the multitude of ways in which man’s control over 
his environment has been extended have all tended toward the 
breakdown of taboo and to the realization of the inherent assumption 
of science that nothing is too sacred or too difficult to be subjected to 
man’s intelligence. The scourge of yellow fever is no longer regarded 
as a supernatural manifestation of divine wrath. It is an affair of 
microbes, mosquitoes, and stagnant water. Navigation of the air, 
a proposal whose presumption was illustrated by the fable of Icarus, 
and whose absurdly impossible nature was emphasized by the derisive 
poem, “Darius Green,” is now a stale wonder. Everywhere are 
the evidences that the taboo which once was attached to every new 
inquiry and experiment will ultimately be attached to nothing but 
the vain attempt to limit the sphere of investigation and control. 
Man has passed first through the period wherein he, like other animals, 
appropriated the things which nature furnished, then through the 
period in which he adapted the things of nature to his own use, and 
finally he is at the threshold of the period wherein he knows he can and 
he is molding “ an artificial world nearer to his heart’s desire. Creative 
evolution is at last becoming conscious.” With it all the worker is 
promised a security beyond anything which he has yet attained. 


392 


THE WORKER IN MODERN ECONOMIC SOCIETY 


2. THE IMMINENCE OF FEAR 1 

It is impossible to exaggerate the imminence of fear in the lives 
of workers wholly dependent upon continuous employment for the 
immediate necessaries of life. 

Capital can wait for its reward. Moreover, the capitalist is at 
once a capitalist and a potential laborer. If permanently deprived 
of his capital, he but experiences the lot of the average worker who is 
expected to be happy so long as he has opportunity to work. Capital, 
moreover, is free to move about. It suffers little from fears of isolated 
position, substitution, dismissal, arbitrary and unjust treatment. 
Such risks as it runs are very largely its own. How vastly different 
is life to its possessor under such circumstances! 

It is the fear of unemployment which lies at the root of most of 
the minor fears which labor entertains. The fear of unemployment 
is in reality the fear on the part of Labor that capital will not be 
provided to carry on industry continuously, and under conditions 
which will afford adequate remuneration to effort. It is an outgrowth 
of the fallacy that quantity of work is necessarily limited. This fear 
gives rise to the fear that the introduction of new machinery, or the 
increased use of machinery already installed, will displace labor; 
the fear that speeding-up processes will diminish work; the fear that 
female, child, unskilled, or imported labor will be substituted for 
skilled; the fear that men of one trade will encroach upon the work 
for which men of other trades have been specially trained; the fear 
that the number of apprentices will be so increased as to lessen the 
requirement for skilled hands; and the fear that long hours and 
continuous overtime will exhaust employment. 

Allied to the fear of unemployment is a class of fears which, as 
seen, have a special bearing on industrial peace: the fear of discharge 
and of unfair treatment through the utter helplessness of the isolated 
workman in relation to the capitalist employer, and, still more, in 
relation to a powerful corporation; the fear of lockouts or arbitrary 
exactions, and the many fears incidental to tyrannical and capricious 
behavior on the part of those in authority, and especially of sub¬ 
ordinate officials toward workers under their direction. This fear 
extends to the power of wealth to defeat the ends of justice, by corrupt¬ 
ing officials and influencing or controlling the judiciary and legislatures, 
and to the influence also of a class interest and sentiment on the part 
of the moneyed classes as distinguished from the working classes. 

1 Adapted with permission from W. L. M. King, Industry and Humanity, 
pp. 236-39. (Houghton Mifflin Co., 1918.) 


GENERAL CONSIDERATIONS 


393 


With it are allied the many fears which have a special bearing on 
health in industry: fears, for example, of physical injury and ill-health, 
and of inadequacy of compensation or redress when injury is done. 

Arising from the worker’s sense of utter helplessness is also the 
fear of the absence of any voice in determining the contract on 
which services are given, and the fear, in consequence, of unfair 
terms of bargaining and in determining the rate of remuneration, the 
hours of labor, and working conditions. This extends to the fear 
of reductions in standards already gained; the fear of individual 
or general reductions in wages, of increase in hours, of change in 
customary practices; the fear of resistance on the part of employers 
to combination; and the fear of methods intended to destroy or weaken 
organization. Whatever begets fear of opposition to organization 
helps to intensify other fears. 

Beset by fears at once so numerous and constant, it must be 
apparent that Labor is in no way capable of putting forth effort to 
the utmost of its capacity. Where the mind is in a state of unrest, 
the arm is divested of some of its power, and the hand of some of its 
skill. Time which otherwise might be freely employed in furthering 
production is consumed in effecting organization against ills that 
are feared, or in agitation concerning their existence. 

3. INSTABILITY OF THE MODERN WORKER 1 

The basic difference between the present day worker and the 
peasant and serf of the past is the difference between stability and 
instability, between security and insecurity, between regularity and 
irregularity. The common round of tasks which filled the lives of 
the peasant from day to day and year to year has no existence for 
the mass of wage earners. So many workers are drifting constantly, 
so many others have their regular habits and customary existence 
undermined by unemployment and lay-offs that even those who 
remain stationary are infected with the restlessness characteristic 
of the less stable. 

Instability means lack of regularity for the individual and for 
society as a whole, it means constant friction, constant danger, 
constant upsetting of old standards and the increasing difficulty of 
creating new ones. The older agricultural economy which the indus¬ 
trial revolution upset was one that lent itself to the growth of custom, 
habit and tradition. Order, regularity, system and repetition of 

1 Taken with permission from Frank Tannenbaum, “Labor Movement Psy¬ 
chology,” New Republic, XXIII, No. 292 (July 7, 1920), 169-72. 


394 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the tasks of yester-year were the prevailing forces in the world before 
the machine tore mankind from its traditional mode of life and 
labor. For thousands of years men lived lives defined by custom 
and made familiar by habit. The weight of centuries of traditional 
method was involved in each task done and in each plan made. 
A hundred centuries of routine dominated social organization. Men 
felt safe and comfortable in the knowledge and sureness of previous 
procedure. Men accepted the world they lived in with but little 
questioning. Doubt—the doubt of the wisdom and propriety of the 
manner in which things were done—was not so keen, so widespread and 
so distinct an aspect of the world in which men found themselves. 
Mental discomfort was at its minimum. All this has been changed. 
The premium, instead of being on the traditional, has been transferred 
to the novel. New things, new ways, new methods, new explanations, 
new procedure are the demands and the expectations that fill our daily 
lives. Ours is above all a dynamic age—and it is dynamic not only 
in terms of new mechanical processes but in terms of new relationships 
which these new processes enforce upon society. All of these forces 
compel a revaluation of accepted values and contribute both to the 
agitation of the mind and the discomfort of the body. 

To this fact of change and irresponsibility there is to be added 
another important element in the worker’s life, his keener, more vivid 
and more constant sense of insufficiency. Men are both more equal 
and more unequal than ever before in the history of the world. They 
are more equal as men and less equal as possessors of material wealth. 
The imagination, the background of basic information, the sense of 
values, of needs and of qualitative understanding is more nearly on a 
level than ever before. At the same time, however, ownership is less 
equally divided. Men desire more because they know more; but 
they satisfy these desires less, comparatively, than when their needs 
were more limited. 

The inequality of wealth is extraordinary. A single illustration 
will do. Nine-tenths of the wealth in Great Britain is possessed by 
less than one-tenth of the population. This is a striking fact, one 
that the annals of English history cannot duplicate. What is true 
of England is true to a less degree of the United States. Never in 
the world has the poverty of the migratory worker on the one hand 
and the riches of the multi-millionaire on the other existed side by side. 
Poverty is comparative. Absolute poverty is rare. A beggar is 
infinitely richer than he who owns nothing. The beggar generally 
possesses a torn suit of clothing and a leaky pair of shoes. That is not 


GENERAL CONSIDERATIONS 


395 


much, it is true, but it is something. He may be said to be on his 
way from absolute poverty to absolute riches. But he has a long way 
to travel. The peasant in the France of Louis XIV was richer rela¬ 
tively than is the modern migratory worker, richer at least in the 
possession of security. 

4. FEAR AS A BREEDER OF WARFARE 1 

A careful analysis of the fears which surround Labor and Capital 
discloses that, almost without exception, they are bred of mutual 
suspicion for which, it must be admitted, experience has given ample 
grounds. Deeper than suspicion lies a belief, sometimes consciously, 
oftener unconsciously, entertained, in opposed as contrasted with 
common interests. This suspicion and distrust between the parties 
to Industry resembles nothing quite so much as the suspicion and 
distrust on the part of nations which leads ultimately to war. The fear 
that Labor will not put forth its utmost effort causes Capital to dilute 
labor, substitute machines, speed up processes, cut rates, and resort 
to the hundred and one other devices which fill Labor with alarm. 
The fear that Capital will seek to take advantage of increased effort 
causes Labor to restrict output, and to resist attempts at increasing 
productivity through the introduction of new methods and processes 
or the promotion of efficiency in other ways. Labor’s attitude of 
resistance fills Capital with alarm. Capital’s attitude increases Labor’s 
resistance. And as fears increase, antagonisms develop. A growing 
class consciousness conceived in mistrust gives birth to vast organiza¬ 
tion, leading to intensified fears of Labor, on the one side, and of 
the moneyed interests, or Capital, on the other. Might comes to be 
substituted for Right. The fruits of Industry come to be viewed as 
the surface of the globe is viewed by warring nations: as so much in 
the way of possession to be apportioned, not by Reason, but by Force. 
Thus is commenced and developed the same kind of competitive 
arming which has proven so fatal between nations, the same kind of 
alliances on the part of opposed groups, the same inevitable drift 
toward ultimate disaster to all concerned. 

5. THE RISKS OF THE WORKER 2 

Classification of risks .—In common with all individuals the 
worker runs the risk of death, accident, fire, war, disease, etc., the 
risks due to his carelessness which include many accidents and deaths, 

1 Adapted with permission from W. L. M. King, Industry and Humanity , 
pp. 260-61. (Houghton Mifflin Co., 1918.) 

2 Prepared. 


396 


THE WORKER IN MODERN ECONOMIC SOCIETY 


and the risks due to the dishonesty of other persons. As a member of 
the working class, however, he bears the unique risks of unemploy¬ 
ment, underemployment, or overemployment, long hours, the risk of 
inadequate wages, the risks arising out of industrial antagonism, 
the risks of specialization, the risks due to the characteristics of 
the machine, the risks of anti-labor legislation, and the risks of com¬ 
petition from his fellows; in particular industries, moreover, he runs 
the risk of seasonal employment, of occupational disease, of sweating, 
of accidents, or moral devolution. The mere enumeration, however, 
of the risks to which the worker is subject does not convey any ade¬ 
quate notion of the general degree of hazard to which he is subject 
as compared with the employer. To gain this adequate notion it is 
necessary to consider some of the special factors affecting the worker’s 
position. 

Insecurity of pecuniary position .—One of the most important of 
these is the insecurity of his pecuniary position. For the great rank 
and file of workers wages are so low in comparison with the cost of 
living that little is left over from the weekly pay envelope after the 
ordinary household expenses have been met. Such being the case, 
not only is it impossible for the worker to lay by a large sum against 
the possible “rainy day,” but he is also unable to expend any very 
large amount for the services of others, or for education which would 
enable him to combat his risks more effectively. The employer, on 
the other hand, with larger financial power at his disposal, is in a posi¬ 
tion to purchase the most expert service in handling his risks, to take 
adequate insurance against their occurrence, and to secure such an 
education for himself and family as will insure a continued recognition 
of risk and effort to overcome it. The influence which this preferred 
pecuniary position of the employer has had in the past is evidenced 
by the many standardized methods and institutions which have 
been developed for dealing with employer’s risks. Thus we have the 
various types of property insurance, of business insurance, the stock 
and produce exchanges, and the various bureaus and services for 
forecasting and preventing the occurrence of events harmful to the 
employer’s interests; and contrasted with these we have the com¬ 
paratively undeveloped forms of insurance applicable to the risks 
peculiar to the employee—insurance against occupational disease, 
against accidents and against unemployment. 

Risks not recognized—A second factor working to the worker’s 
disadvantage is his inability to secure a wide-spread recognition and 


GENERAL CONSIDERATIONS 


397 


appreciation of his risks. The cessation of one worker’s activities, 
as the result of the operation of the risk of accident, for example, is 
of not nearly such great significance or news interest, as the destruction 
or failure of a plant supplying thousands of consumers. The absolute 
amount of the loss occasioned by destruction or failure of the plant 
is much greater than in the case of accident to a single worker. More¬ 
over, the employee attending to the plain business of getting a living 
has little time, or little inclination to occupy his leisure time studying 
methods of avoiding or overcoming risk, securing public recognition, 
or obtaining the education which will enable him to meet his risks 
effectually. 

Risks affect employee personally. —Finally, the degree of employee’s 
hazard is greater than that of the employer for the reason that the 
risks to which the employee is subject affect him more personally. 
That is to say, if such risks as unemployment, accident, or occupational 
disease materialize, the employee suffers directly, in physical pain, 
in hunger, and in the deprivation of his home of the necessities of 
existence. Materialization of employer’s risks on the other hand 
acts first on the plant organization and only secondarily on the 
individuals who compose and control it. The effect of destruction 
or failure of the plant may it is true bring about a reduction in the 
employer’s standard of living, or may reduce him to the rank of an 
employee, but rarely does it bring him to such extremities of personal 
want as does the functioning of risks for the employee. 

PROBLEMS 

1. Do the recent famines in Russia and China and the epidemic of influ¬ 
enza in 1918 bear out the statement: The worker today has a security 
against famine and disease which he never possessed before ? 

2. Of what significance to the worker is the fact that the teaching of 
medicine is rapidly being taken out of the hands of profit-seeking 
institutions ? 

3. “Famine is never an absolute fact. The word implies simply that the 
price of food has passed beyond the worker’s ability to buy. The under¬ 
nourishment of the working class is testimony to the fact that they live 
constantly in a state of semi-famine.” Discuss. 

4. Does the worker today have security against arbitrary treatment by 
the government ? 

5. Does the fact that possibly 30 to 40 per cent of the workers stay away 
from the polls nullify the supposition that they have a security through 
increased participation in government ? 


398 THE WORKER IN MODERN ECONOMIC SOCIETY 


6. “The worker today is in a far better position than the medieval serf 
who was forced to go to war at the whim of his lord.” “The modern 
state in war time exercises its power of conscription without consulting 
the worker.” Has the worker gained or lost in security against war? 

7. Many matters are supposedly given thoughtful attention by statesmen 
which would be ignored if the worker did not possess the ballot. What 
matters? Be specific. 

8. “The work of the research student and the more general teaching of 
the social sciences contributes to the security of the worker.” Give 
content to this statement. 

9. A labor leader: “Any teacher who is intellectually honest can do more 
for the labor movement than the average officer of a union.” Do you 
agree with this statement ? Why or why not ? 

10. “Education makes the worker articulate.” Articulate in regard to 
what ? 

11. Is there any real security to the worker in the fact that industrial 
society is producing increasing quantities of want-satisfying goods ? 

12. “The question that concerns the worker is not how much is produced 
but how it is distributed.” Do you agree ? 

13. “Look at the marvelous variety of goods produced today and notice 
how the worker’s life has thereby been enriched.” “The worker now 
has his choice of fifteen expensive denatured breakfast foods in place 
of the good whole wheat which his ancestors ate.” Which statement 
most adequately decribes the worker’s lot ? 

14. “A worker of moderate skill possesses the possibility of traveling either 
by auto or by train and in a thousand other ways of enriching his con¬ 
tacts, while the medieval craftsman lived and died within the limits of 
a few square miles.” What significance, if any ? 

15. “The worker enjoys more security of property than ever before.” “It 
is the security of property in the hands of the few that makes the worker 
insecure.” What validity has each of the foregoing statements ? 

16. “Programs to prevent accidents, to stabilize employment, to pool 
financial risk do not constitute a gain in security as compared with the 
craftsman of 1700; they are simply imperfect devices attempting to 
meet some of the costs of modern machine industry.” Explain and 
criticize. 

17. How can class consciousness, which drives a wedge between the worker 
and his employer, afford a security to the worker ? 

18. “Class consciousness leads to conflict and conflict leads to a clarifica¬ 
tion of the issues.” Specifically, what does this mean ? 

19. We are witnessing today a new development in ethical standards. 
Where do they come from, and of what significance are they to 
the worker ? 


GENERAL CONSIDERATIONS 


399 


20. “The worker cannot depend upon what people give; it’s all a matter 
of what he can get—and that means conflict.” Comment. 

21. “Science is neither moral nor immoral; it is ‘unmoral.’ Just as in 
war it can and does both save and destroy human life so it can exploit 
or save the worker from exploitation, and there is no assurance that 
it will be used to save the worker from exploitation.” Discuss. 

22. How do conflict and complexity in modern social relations call for the 
scientific method ? 

23- “Intelligence originally developed to meet the need of a situation too 
complex to be handled by instinctive reactions.” What does this 
suggest for the increasing use of rationality in seeking social 
adjustments ? 

24. Science is the enemy of taboo. Does science develop taboos of its own ? 

25. “It is the faith of the scientist that man is not a pawn in a game played 
by higher powers; that his external as well as his internal destiny is in 
his own hands.” Of what value is such a faith ? 

26. Draw up a list of the fears of the workers. 

27. “Fear does not make for industrial peace.” “Once a worker is no longer 
afraid of losing his job, look for trouble.” Which statement is correct ? 

28. “The worker feels that wealth is likely in a given case to defeat the cause 
of justice and that doesn’t help matters any.” What does this state¬ 
ment suggest to you ? 

29. “Where the mind is in a state of unrest, the arm is divested of some of its 
power, and the hand of some of its skill.” Granted, what can be done 
by the business manager, if anything ? 

30. “Remove fear and you remove a disciplining element which has made 
modern co-operation in large-scale industry possible.” Comment. 

31. “Among the fears of the worker is the fear of arbitrary treatment by 
foremen.” Granted. What can be done about it ? 

32. “Labor fears that capital is bent upon one end—its exploitation.” 
“Capital feels that labor has but one goal—to demand so much that 
business can no longer be carried on.” Granted, how do you account 
for such diverse points of view ? 

33. “Ignorance is the basis of most fears.” Ignorance of what? 

34. Can we expect fear to be absent when we have a society conducted by 
workers who are seeking more wages and employers who are seeking 
more profits ? 

35. “The fears of the worker are rather the fears that so-called intellectuals 
would have if they were workers—but they’re not.” Discuss. 

36. “Workers are dull, sodden, fatalistic. Why talk about what they 
should fear. They tread accustomed paths and are indifferent toward 
accustomed hazards.” Are these proper characterizations of “the 
worker” ? 


400 


THE WORKER IN MODERN ECONOMIC SOCIETY 


37. “If some super-being should suddenly drop down from some strange 
planet where life was eternal and saw human beings possessed of limited 
life, he would be inclined to exclaim, ‘Man must fear death.’ As a 
matter of fact man doesn’t think of death except on rare occasions. 
It certainly doesn’t govern his daily actions.” Isn’t the attitude of 
the worker toward what he is supposed to fear somewhat similar? 
If so, why ? If not, why not ? 

38. What is the best way to determine whether workers actually fear 
what the readings speak about ? 

39. What is the essence of risk ? 

40. “If the happening of an event is certain, risk is gone though cost may 
continue.” Give content to this sentence. 

41. Modern Industrial Society has been termed “a risk-creating and risk¬ 
bearing society.” In what sense in this a proper characterization of our 
economic organization ? 

42. “The worker bears all the risks of the employer and in addition has some 
unique risks to bear.” Explain and criticize. 

43. “When you state the risks of the worker you are simply stating the risks 
of the business manager from another point of view.” Do you agree ? 
Why or why not ? 

44. How does increasing knowledge decrease risk ? Illustrate. 

45. In dealing with risk prevention of harmful events is but a part of the 
problem. Granted, what is the other part or parts ? 

46. “No small part of the problem dealing with the risks of the worker is 
the cost involved.” Indicate some of the costs. 


CHAPTER XIV 
ACCIDENTS 

i. EXTENT OF INDUSTRIAL ACCIDENTS 

a) GENERAL 1 

The rapid growth of the “safety first” movement justifies the 
belief that employers as well as the public have realized the economic 
importance of preventing the waste of human life and efficiency 
which results from accidents in industrial establishments. 

Extent of industrial accidents .—Probably the most trustworthy 
estimate of the extent of industrial accidents is that made for 1913 
by Mr. Frederick L. Hoffman, of the Prudential Life Insurance 
Company. His estimate is based on statistics from the publications 
of the U.S. Census, the U.S. Bureau of Mines, various state reports, 
and the industrial experience of the Prudential Company. “The 
probable approximate number of fatal industrial accidents, ” he says, 
“ among American wage-earners, including both sexes, may be conserv¬ 
atively estimated at 25,000 for the year 1913, and the number of 
injuries involving a disability of more than four weeks .... at 
approximately 700,000.” The lack of accurate and comparable 
statistics relating to industrial accidents renders any estimate of 
doubtful value; only when, the most conservative data are used in 
making a general estimate, as Mr. Hoffman has done, is the estimate 
of any possible value in indicating the gravity of the accident hazard 
as a condition affecting the American workingman. As Mr. Hoffman 
points out, “At the present time there are no entirely complete and 
trustworthy industrial accident statistics for even a single important 
industry in the United States. The most reliable data are those for 
the iron and steel industries, mining, and railways. For most of the 
other groups the assumed industry accident rates are relatively low, 
and in all probability the actual hazards .... are somewhat higher 
than those upon which he based his estimate. ” 

Occupational accident hazards .—Even such statistics as are now 
available point very clearly to the fact that in some occupations the 
danger of accidents is fnuch greater than in others. Metal and coal 
mining appear to be the most hazardous, with railroad employment, 

1 Taken with permission from Lauck and Syderistricker, Conditions of Labor in 
American Industries, pp. 192-95. (Funk & Wagnalls Co., 1917.) n 


401 


402 


THE WORKER IN MODERN ECONOMIC SOCIETY 


quarrying, and the lumber industry well up the list of dangerous 
occupations. -They are apparently more hazardous than the occupa¬ 
tion of soldier in the United States Army, and between two and three 
times as hazardous as the average for all occupations in which males are 
employed. 

b) FATAL INDUSTRIAL ACCIDENTS 1 
The following table of estimates was prepared by Mr. Frederick 
L. Hoffman showing the probable accident rates for some of the typical 
and representative groups of occupations. 

ESTIMATE FOR THE UNITED STATES FOR 1916 


Sfo/es 

Pfe/a/ ///o/ng 
Goa/ Ji/n/og 
T/aOer/es 
/fot/zgaf/on 

E/ec/r/c/ans Q,yM ana Pouter) 
AaPy am/ ffar/ne Gorps 
Eo/O/era. L/.S.Army 
Quarry/ng 
PamOer Px/ua/ry 
J?a//u/aya, <E7ea/n (Mera/am) 
Go/re Opens 
Ore Dressing 

BuMmg and Gona/ri/c//on 
Draymen, 7eama/era. e/c. 
<S/ree/-P>a//tPay Emp/ogeea 
Ore Ame/f/ng 

Wa/cfimen. W/cemen. 7/fcmen 
Dai/u/ays, F/ec/r/c CttAnz/t/M) 
%7e/Pone a/x/ 7e/egrapD (£%£/%) 
Ayr/aA/it/a/ Purau/As 
Sfaaufic/ltr/np (Oenera/) 

A// Otter Occupied A/a/es 

A// Oca/pied P/a/es 

A// Occupied Temo/es 


Employees ♦ 7a/er/A/es»7)efe per /.000 Fmp/ot/ee* 

O /.OO 7.00 J.OO 


205.000 

700 

750000 

7273 

/5QCW 

470 

/58000 

074 

7/000 

160 

69000 

/3d 

107,600 

2/5 

9/,000 

/73 

550,000 

837 

1573,000 

2370 

32,000 

05 

20.000 

33 

/575.000 

/P69 

720,000 

720 

336,000 

336 

00,000 

36 

2/0.000 

/50 

75.000 

45 

257,000 

129 

12.6OQ000 

4,0/0 

760/000 

/y/o 

5./25000 

3,792 


y2.EV.600 2097 


7560000 567 



Note. —Approximately, there are 22,000 fatal industrial accidents per annum 
in the United States and 260,000 serious injuries. 


c) DISTRIBUTION OF INJURIES 2 

A Massachusetts study of the distribution of injuries according 
to causes resulted in the following graph: 


Occupational diseases, etc. 

Miscellaneous 

Animals 

Hand tools 

Handling of objeote 

Falling objects 

Violent oontaots 

Falls 

Explosions, eto* 

Vehicles 

Machinery 



NUMBER OF CASES 



15,000 


I 


20,000 


1 Published with permission of the Prudential Life Insurance Company. 


2 Report Massachusetts Industrial Accident Board 


, July 1, 1917, to June 30, 




























ACCIDENTS 


403 


d) DURATION OF DISABILITY IN CASES OF TEMPORARY 

TOTAL DISABILITY 1 

The length of time the worker is disabled is always a matter of 
serious concern. The following graph reports the experience of 
Massachusetts as reported by the Industrial Accident Board. 



5,000 


10,000 


15,000 


20,000 


t5,0C0 


e) COST OF ACCIDENTS IN 1919 2 

From industrial accidents .—In 1919 there occurred in industry 
about 23,000 fatal accidents, about 575,000 non-fatal accidents 
causing four weeks or more of disability and 3,000,000 accidents 
causing at least one day’s disability. The figures for 1918 were about 
13 per cent higher. 

The time lost is estimated to be 296,000,000 days. Allowing for 
an average wage of $4 per day during the time actually lost, adding 
an estimate for impaired earning power because of disability or death, 
but subtracting the subsistence of those killed, this gives an economic 
loss of the country of about $853,000,000 for the year 1919. 

This is not the whole loss chargeable to accidents. 

In one state (Wisconsin) the costs to employers for medical and 
surgical aid and hospitals’ bills, and the overhead expenses of insurance, 
equaled 86 per cent of the actual compensation paid to workmen. 

1 Report Massachusetts Industrial Accident Board, July 1, 1917, to June 30, 
1918. 

2 Adapted with permission from Wqsle in Industry , pp. 22-23. (Published by 
Federated American Engineering Societies, Washington, D.C., 1921.) 





































































































404 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The compensation paid the workmen was about 22 per cent of the 
total actual and prospective wage loss. Records from other states 
indicate that this is probably typical. On this basis the total direct 
cost of industrial accidents in the United States in 1919, including 
medical aid and insurance overhead, was not less than $1,014,000,000. 
Of this $349,000,000 was borne by employers and $665,000,000 by 
employees and their dependents. 

These approximate figures are low because they do not include 
medical expenses incurred by workmen and not paid by the employer 
or insurance company; overhead cost or personal accident insurance 
carried by workmen; cost of training new men to take the place of 
those injured; employment and welfare department expense in keeping 
track of injured workmen and their families. The addition of these 
items would bring the total well over a billion dollars per year. 

In this calculation no account has been taken of the indirect loss 
of production due to the stoppage or slowing up of work when an 
accident occurs. This affects not only the operation at which the man 
is injured, but associated operations as well. It applies also to 
“near-accidents” in which no personal injury occurs. 

Experience indicates, and authorities agree, that 75 per cent of 
these losses could be avoided, with a saving in direct, clearly ascer¬ 
tained losses alone of a quarter of a billion dollars per year to employ¬ 
ers, and half a billion to employees. 

2. EFFECT OF ACCIDENTS ON WAGES 1 

It has often been argued that, in the absence of accident insurance 
cost levied on employers, wages are enough higher to correspond. 
It is argued that wages in dangerous trades are adjusted to the degree 
of risk. The workman was assumed to be entirely rational, as the 
“economic man” of the classical economists, possessed of competent 
knowledge, and with ability and power of bargaining sufficient to 
insist on such an adjustment. Is there any basis in fact for this 
presumption ? 

The cause of persisting differences in wages in any particular 
labor market lies in the action and inaction, preferences and dislikes, 
and differences in the ability of labor. If a higher wage is paid in a 
dangerous industry for labor of a given degree of skill than in a 
relatively safe occupation, it is paid not because the employer is able 
to pay more but essentially because the employee demands-more. 

1 Adapted with permission from Robert M. Woodbury, Social Insurance, An 
Economic Analysis, pp. 56-70. (Henry Holt & Co., 1917.) 


ACCIDENTS 


405 


An adjustment of wages to the degree of risk might be caused: 
(r) by the inclusion in the standard of living of all workmen of an 
item of accident insurance, or (2) by the avoidance of dangerous 
occupations by labor, together with the insistence upon higher pay 
to compensate for the degree of risk by those who remain in them. 

If all workmen included in their standard of living provision for 
accident insurance, there would result an adjustment of wages accord¬ 
ing to the risk. The cost of insurance would vary with the degree 
of danger. Workmen would have an accurate measure of the degree 
of danger in that cost. Having thus a definite knowledge of the cost, 
an adjustment could be affected through an insistence on a higher 
rate of remuneration for the extra risk. 

There is, however, no general accident provision made by all 
workmen. Accident insurance is not now part of the standard of 
living of the working class. There can therefore be no general 
adjustment of wages to risk on this basis. 

The second possible theoretical basis of the proposition that 
extra compensation is paid for extra risk is that labor avoids dangerous 
occupations or insists on higher pay. In other words, at the same 
wages for equal degrees of skill labor shuns the dangerous and flocks to 
the safe industries; only with an increased offer of wages will there 
be an adequate supply of labor attracted to the dangerous trade. 

On this hypothesis the compensatory adjustment of wages will 
not necessarily be in proportion to the cost of accident insurance. 
It will take place on the basis of an indefinite “avoidance” of the 
trade by workmen. The dangers of an occupation will be merged 
in with the other characteristics which influence labor to prefer or 
to shun the injury. Whether under this theory wages would increase 
by the full amount of the cost of accident insurance to cover the risk, 
by only a part of it, or by many times the cost, would be impossible 
of prediction and would depend on the psychological effect on the 
workmen of the knowledge of the presence of danger. 

The essential difficulty with the theory of wage adjustment lies 
in the inadequacy of popular knowledge of the degree of risk. Avoid¬ 
ance of dangerous trades and an estimation of compensation can occur 
only if the character of the industry or the degree of risk is known. 
An unknown element cannot be accounted for in the psychology of 
the workman when he makes his contract. Statistics of deaths and 
minor injuries have been and are far from perfect, especially in this 
country. The average workman has no first-hand knowledge of 
the statistics, but merely a general acquaintance with the conditions 


406 THE WORKER IN MODERN ECONOMIC SOCIETY 

of work. And his familiarity with the conditions of danger is more 
apt to make him less apprehensive and to breed contempt for the risk 
than to move him either to avoid the occupation or to demand more 
wages. If workmen are ignorant of conditions in a dangerous industry, 
or if they disregard the hazard, there will be no tendency to avoid it. 

A high accident or general mortality rate in an occupation will 
not affect the supply of labor, if men enter it freely. Men learning 
of danger may leave the trade quickly; but if others ignorant of danger 
are always waiting to take their places, only the permanence of the 
labor force, not wages, will be affected. 

In case of industrial diseases, familiarity with and dread of the 
results might cause men to be continually leaving the trade. The 
effects of lead poisoning are soon learned by new-comers to the lead 
industries, and the character of the industry seems to affect the 
permanence of the labor force. The case is quite otherwise where 
there is popular knowledge of the degree of risk. Sometimes danger 
is so obvious that physical bravery is required. Rescue work in a 
mine, in which an explosion had just occurred, would not be under¬ 
taken for mere pay without a high extra compensation. Timid 
souls shrink from such work. Brave men volunteer without thought 
of pay. In this case danger is evident and must be faced at once. 
The name of the occupation may be suggestive of danger to the most 
impervious brain. Powder mills suggest to the least imaginative 
the possibility of an explosion. An extra wage may have to be offered 
in such occupations to secure an adequate labor supply. Reckless 
men who care not if an accident occurs or men who have faith in their 
own good fortune may scoff at or disregard the chance of accident. 

For the rest, danger exercises little or no influence upon choice 
of occupation or on the demands of labor. A man’s occupation is 
often decided by the opportunities which are open to him. Coal 
mining and seafaring are among the most dangerous trades. Men who 
have grown up in a seaport town are apt to minimize the danger of 
seafaring. In a mining town, mining may be the only occupation 
open. Not only is there no accurate knowledge of the degree of risk, 
but there is no common action on the part of labor either in avoiding 
the industry or demanding higher pay. 


ACCIDENTS 


407 


3. CONSEQUENCES OF INDUSTRIAL ACCIDENTS 1 

The serious consequences to a wage-earner’s family resulting from 
the removal by fatal accident or the maiming and incapacitating of 
its breadwinner hardly need to be pointed out. They are suggested 
by the statistics showing accident mortality rates according to age 
which have already been quoted, the large number of workers killed 
by accidents between the ages of 25 and 45 indicating the frequency 
with which fatal accidents occur in that period in which the ordinary 
worker has a family dependent upon him for support. Statistics 
published by the Bureau of Labor Statistics of Illinois emphasize 
the economic importance of industrial accidents because they show 
the conjugal condition of injured persons. 

The Illinois statistics for the five years ending with 1912 showed 
that of the 3,084 persons killed in industrial accidents, 62.4 per cent 
were married and that they had 4,872 children and dependents, and 
that of the 25,696 injured workers 57.8 per cent were married and that 
they had 28,626 children and dependents. This, as has been remarked, 
“is unquestionably a considerable understatement of the facts.” 

4. CAUSES OF ACCIDENTS 

a) FATIGUE 2 

Speed of operation is admitted as an important cause of accidents, 
the exposure to risk increasing as the number of operations per hour 
or per minute rises. Fatigue has been advanced as an additional 
and important cause, but this theory has been attacked on the ground 
that in the final hours of the working spell, when fatigue should be 
at its height, the accident curve is falling. In this study, after making 
careful allowance for such items as lost time, change in work, and the 
like, which might interfere with the normal incidence of accidents, an 
index figure is worked out, showing the hourly accident rate per unit of 
output. This presents a striking contrast to the customary accident 
curve, for although in the latter hours of the spell or the day the accident 

1 Taken with permission from Lauck and Sydenstricker, Conditions of Labor in 
American Industries, pp. 197-209. (Funk & Wagnalls Co., 1917.) 

2 Adapted from “Industrial Accidents,” Monthly Labor Review (May, 1920), 
p. 161. 


408 


THE WORKER IN MODERN ECONOMIC SOCIETY 


rate declines, yet the rate per unit of production shows an increase. 
The main conclusions reached in this study of accidents are as follows: 

a) In the absence of fatigue, accidents vary directly with speed 
of production, owing to increased exposure to risk. 

b ) The breaking of this regular variation by fatigue is indicated 
by: (i) The rise of accidents with the fall of output. (2) The dis¬ 
proportionate rise of accidents with the rise of output, and the lack 
of proportionate fall of accidents with the fall of output in the final 
hours of the day. 

c) The importance of fatigue in the causation of accidents is 
emphasized by the fact that the higher accident risk accompanies 
the deeper decline of working capacity: (1) In the second spell as 
compared with the first. (2) In muscular work as compared with 
dexterous and machine work. (3) At the io-hour plant as compared 
with the 8-hour plant. 

d) The level of the accident rate varies with the inexperience of 
the workers. 

b) INTERDEPENDENCE AND ACCIDENTS 1 

Broad and narrow gauge railroads together do not accomplish 
as much destruction of human life as the traveling cranes, which are 
so indispensable to the work of the steel mills. 

Watch this invaluable monster at work. See him pick up one set 
of massive rolls, carry it off, and bring back another to take its place. 
See him reach an iron hand down into the red depths of a soaking 
pit, pull out a glowing ingot, carry it away and place it carefully on 
the roll-table. See him gather up a great armful of finished steel 
plates and bear them out to be piled or loaded. 

“A strong, swift, intelligent servant/’ says Industry. “What 
complaint have you to make against him?” 

The crane “hook-ons,”—the men on the ground who arrange 
the chains, and hook and unhook the load—run greater risks than any 
other men connected with the operation of cranes. The hook-on 
must stand by, to steady the load and keep the chains in position, 
until the crane has actually begun to lift and the chains to straighten. 
There are three dangers therefore for the hook-on: the load may slip 
out as it is being raised and crush him; it may strike him as it swings; 
or a chain may break and let it fall. Similar dangers are involved in 
unloading the crane. 

1 Taken with permission from Crystal Eastman, Work Accidents and the Law , 
Russell Sage Foundation, 1916 ed., pp. 97-98. 


ACCIDENTS 


409 


When a hook-on is killed by a load slipping from the crane chains, 
the accident is always laid to his carelessness in fastening the load. 
But the justice of this judgment is questioned. An engineer told me 
that it is next to impossible to insure a grip of the load under the 
thousand and one conditions which obtain, particularly in the handling 
of irregular shapes. On our list four hook-ons were killed in this way; 
once it was a heavy roll that slipped, once the side of a steel car, 
twice a load of steel bars or “angles.” Each of the men thus killed 
was a common laborer and a Slav. 

Accidents to those who load cranes are very common, even when 
the load does not fall. Four men struck by the load just as it was 
being lifted by the crane were instantly killed. Another was killed while 
using a crane to load ingot molds on a car. He was standing on the car 
to unhook the chains from the last mold as the crane lowered it into 
place; a jerk of the chains at the wrong moment toppled the mold over 
upon him. Two men were killed while loading a car with steel billets by 
means of a crane. In each case the car was suddenly moved, without 
warning to the laborer in it, and he was knocked down and killed by 
a load swinging from the crane just above the floor of the car. Both 
accidents happened at night. In one case it was stated that the yard 
was dark. Both the men killed were foreigners, one of four months’ 
experience in a steel mill, the other on his first night’s work. Another 
hook-on was killed while standing behind a handcar, waiting to unhook 
the chains from a descending load of scrap. The scrap landed too 
near the end of the car, the car tipped, shot out from under the load, 
and ran over him. 

The prevention of accidents in this group depends upon the skill 
and care of the man in the cab; upon the experience, caution, and 
alertness of those below who hook and unhook the load, and more 
than all else upon co-operation between crane man and hook-on. 
The crane man is usually an American boy of eighteen or twenty, 
the hook-on, a Slav, a common laborer. They must communicate 
largely by signals and in an atmosphere often thick with smoke or 
steam. There is one foreman for about seven cranes, so that for the 
most part these two work without direction. Several times we 
heard these complaints from fellow workmen of a hook-on who had 
been killed: “The crane boy didn’t wait for a signal.” “He jerked 
the chains up too soon, ” etc. The crane boys, on their part, complain 
of the stupidity and slowness of the hook-ons. 


4io 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Many men not working with the crane are killed by it. Thus, 
the four men in the table (omitted) killed by a load falling from a 
crane because the hook or chain broke, were laborers engaged in other 
work on the floor of the mill. Two of these deaths were made more 
horrible by the fact that the metal which fell was hot. The four men 
were Slavs. “Oh, that is significant,” says a superintendent, 
“Americans would know enough to keep out from under those loads.” 
In answer to this it will be well to tell the story of one of these Slavs. 
He was eighteen, and had been in this country three months. The 
foreman told him to go to work in a certain place. He refused at 
first because he was afraid of the great bucket moving over his head. 
But the foreman insisted, telling him with a rough laugh that it did 
not matter whether he was killed or not. He went, afraid to lose his 
job. A few minutes later a hook broke and the bucket, weighing 
with its load 6,900 pounds, fell and crushed him. The crane operator 
testified at the inquest that he “never knew of hooks being inspected.” 

It is worth while to pause long enough over these four dead 
“Hunkies” to notice a special reason for being careless of the lives 
of aliens. They had no relatives in this country. Consequently, 
protected by the “non-resident alien rule,” their employers suffered 
practically nothing from these four fatalities. One man lived seven 
days, costing the company $7.00, besides his funeral expenses. In 
the other cases the funeral was the only expense, amounting to about 
$75 apiece. 

These five accidents show that even though chains should never 
break, it is not safe to stay in the path of a working crane. The 
question remains, Is it ever necessary ? The American Bridge 
Company* in its posted rules, forbids “the passing of any person 
under load carried by crane.” These five men, however, were engaged 
in work when the crane load passed over their heads. Some mills 
may be so arranged that a man never has to work under a moving 
crane, but in most cases this is not so, as is freely admitted by those 
who are connected with the work. In the National Tube Company 
works at McKeesport, I saw three men at work in a freight car so 
placed that every twenty minutes a tremendous load of pipes passed 
over their heads. It is hardly possible that the foreman should expect 
these men to climb out of the car and stand idle every time the crane 
passed. 

All this goes to show the futility of schemes for safety when the 
spirit of the mill is one of recklessness and speed. It is not seriously 


ACCIDENTS 


411 

intended by anybody to stop the crane every time a repair is to be 
made; it would be against the interest of those concerned. 

“ Suppose a mill is running smoothly,” said a superintendent in 
explaining this matter, “then something happens to the crane which 
carries ingots to the blooming mill. First thing you know, the rail 
mill will get through with the rail it is making and be ready for another 
ingot. When it doesn’t come just in time the rail mill will be crying 
after the bloom mill; the bloom mill will complain to the ingot man; 
then the ingot man will go after the crane man. That’s why the crane 
doesn’t stop for repairs. The way mills are run now, there is no 
time to stop the crane. You see, there ought to be a man whose 
income is independent of how milch steel is rolled, who has authority 
to say, ‘That crane has got to stand idle until a certain repair is 
made.’” 

c) THE SPIRIT OE THE GAME 1 

The example most commonly used to show a brakeman’s reckless¬ 
ness is his custom of standing in the middle of the track to board a 
yard engine that is coming toward him. Although rules are often 
posted forbidding this, they are universally disregarded. Most 
railroaders would agree with the brakeman who said to me: 

“You see, getting on in front your foot touches the footboard 
first, so if you slip there is no chance of saving yourself. Getting on 
at the side you take hold of the grab iron first, so if your foot slips 
there is some chance of hanging on. Yet I always get on in front 
myself. We all do. It’s easy and simple. There is a kind of fascina¬ 
tion about it. You win or you lose. It’s a gamble. And then, 
it’s not professional to get on at the side. No good railroader does it.” 

d) VIOLATION OF RULES 2 

Often serious accidents occur from a violation of rules. Here 
are two cases illustrating the point: 

Fritz Collins had occasion to go up on a crane to make repairs. Instead 
of going up the pole, he signaled to the crane man, and rode up on the 
spreader of the crane. The spreader in going up hit the cage and Collins 
was knocked off, the spreader falling on top of him. The testimony revealed 
that rules were posted forbidding the men to ride up on the crane in this 

1 Taken with permission from Crystal Eastman, Work Accidents and the Law, 
Russell Sage Foundation, 1916 ed., pp. 24, 97-98. 

2 Taken with permission from Crystal Eastman, ibid., pp. 97-98- 


412 


THE WORKER IN MODERN ECONOMIC SOCIETY 


way, but that it was a customary performance with which the foremen 
were familiar and which they did not prevent. 

John Muschenitch, a dumper at the tipple of the Oakdale mine, was 
working overtime one night on the stock pile and rode down to the tipple 
in an empty coal car. These cars are run by electricity, the trolley being 
only seven and one-half feet above the rails. As he started to get out of 
the car, Muschenitch happened to touch this trolley with his neck and was 
electrocuted. The significant thing about this incident is that, although 
it was against the rules to ride in the empty cars, Muschenitch’s boss, the 
weighmaster, not only let him ride but got in and rode with him. 

5. THE COMMON LAW AND ACCIDENTS 

[Note: At Common Law it is the duty of the employer to use 
reasonable care (a) to select competent fellow servants, ( b ) to provide 
a safe place to work, and (c) to furnish safe tools and appliances; in 
general, to use reasonable care to conduct his buiness in a safe manner. 
In an action brought against him for damages by a worker injured 
while in his employ the following rules exist: 

a ) The employee cannot collect for injuries sustained while at 
work if they arise from the negligence or carelessness of a 
fellow servant (Fellow-Servant Rule). 

b) The employee takes upon himself (1) the natural and ordi¬ 
nary risks and perils incident to the doing of his particular 
task, and (2) any particular risk in question if after he 
becomes aware of it, he elects to continue at work (Assump¬ 
tion of Risk Doctrine). 

c) The employee has no right of action for damages received 
while at work, even though employer is negligent in not 
performing his duties, if the employee in any way contributed 
to the accident by negligence on his own part (Contributory 
Negligence Doctrine).— Ed.] 

a) THE FELLOW SERVANT DOCTRINE 1 

The Illinois Steel Company v. Timothy Coffey 

Mr. Justice Boggs delivered the opinion of the court: The appellee, 
an employee of the appellant company, charged with the duty of 
digging the packing out of the tapping hole of one of the furnaces, on 
the 29th day of December, 1899, while engaged in the discharge of 
that duty, was seriously burned by a sudden and unexpected outflow 

1 Adapted from 205 Illinois Reports 206. 


ACCIDENTS 


413 


of the liquid metal, accompanied by flame and gases from the tapping 
hole. It was clear appellee’s injury was the result of the careless 
and improper manner in which the loam, dolomite, and magnesite 
had been packed in the tapping hole. This work had been performed 
by one George Swick, also an employee of the appellant company, 
and the ground of the appellee’s right of recovery was, that the 
appellant company, as master, was legally liable to respond for the 
•negligence of the said Swick. 

The work of melting the iron and steel together was continued 
both night and day in these furnaces and was performed by two forces 
of men. One of the forces went on duty at six o’clock p.m. and labored 
until six o’clock a.m., and the other force then returned and relieved 
them and remained on duty until six o’clock that evening, when they 
in turn were relieved by the other force of men returning to the work. 
One man on each force was called “second helper.” The appellee 
was second helper of the force that went on duty at six o’clock in the 
evening and said George Swick was second helper of the other force. 

The appellee and said Swick were servants of the same master. 
The master was not guilty of any lack of ordinary care in selecting 
and employing Swick. In doing the work each of them was liable to 
be placed in great peril by the negligence of the other. Their duties 
brought them together at regular intervals twice in each twenty-four 
hours, at which times they each had opportunity to impress upon the 
other the necessity of care, and to exercise a mutual influence, each 
upon the other, promotive of proper caution and faithfulness in the 
performance of the work. The relation between them was that of 
fellow-servants, and the common master was not liable to respond 
to either of them in damages for an injury arising because of the 
negligence of the other. 

b) ASSUMPTION OF RISK 1 

Emory A. Hayden v. The Smithville Manufacturing Company 

Action on the case, brought by the plaintiff, a minor, by his next 
friend, for an injury caused by the negligence of the defendants, 
in whose factory the plaintiff was an operative, in leaving certain 
dangerous machinery uncovered. The case was tried to the jury on 
the general issue. 

On the trial it was admitted that the defendants were the owners 
and occupiers of the manufacturing establishments described in the 

1 Adapted from 29 Connecticut Reports 548. 


414 THE WORKER IN MODERN ECONOMIC SOCIETY 

declaration, with the machinery therein, and that the plaintiff, on 
the 6th day of April, 1859, was, and for three weeks previous had been, 
one of the operatives in the mill, under a contract of hire; and that 
on that day he received an injury to his right hand by being caught 
in the gearing of a spinning frame in the mill. The plaintiff introduced 
evidence to prove that his injury was occasioned by the omission, 
on the part of the defendants, to cause the gearing on the spinning 
frame to be properly covered by a bonnet, and that reasonable and 
ordinary care on the part of the defendants required that it should 
have been so covered; all of which was controverted by the defendants. 

Opinion of the court: Upon the facts presented by the motion the 
court erred in not charging the jury that there could be no recovery 
on the part of the plaintiff. It was found that the plaintiff was in 
the service of the defendants, engaged in his ordinary duties, and that 
the machinery was in the same condition at the time of the accident 
as when the plaintiff entered service, and that he had knowledge of 
the condition of the machinery. Upon these facts it is well settled 
that the defendants cannot be liable to him for the injury. The 
defendants have a right to use such machinery in their factories as 
they think proper. Their workmen enter their service voluntarily, 
and in so doing take the risks of the business as it is. The service 
is undertaken in view of the peril involved in it, and in entering upon 
it the servant waives the right to treat the omission of precautions 
against the danger as negligence. 

C ) CONTRIBUTORY NEGLIGENCE 1 

Soil v. Williamsport Radiator Company , Appellant 

On May 23, 1909, the plaintiff, a man then forty-nine years of 
age, while working at the manufacturing establishment of the defend¬ 
ant company suffered a fracture of the left arm, which necessitated 
its amputation. He had been employed by the defendant for about 
two years before the accident. It was part of the plaintiff’s duty to 
keep these rattlers running. They were revolved by means of belts 
extending to and connected with pulleys on a line-shaft attached to 
the ceiling some ten or twelve feet overhead. When the plaintiff 
came to work on the morning of the accident he found that one of these 
belts was off the line-shaft pulley. The defendant had no belt- 
shifters or other mechanical contrivances for the purpose of throwing 
the belts on or off, and it was the habit of the men employed about 

1 Adapted from 231 Pennsylvania State Reports 585. 


ACCIDENTS 


415 


the establishment to replace them by climbing a ladder to the line- 
shaft and adjusting the belts by the aid of a piece of wood or stick, 
which was kept for that purpose; and this the plaintiff attempted 
to do. He testified: “I crawled up on there [the ladder] to put the 
belt on. I was holding the belt in the one hand and the stick in the 
other, and I shoved it in as carefully as I could, but the stick catched, 
and my arm went right under, but after that, I do not know what 
happened.” 

Opinion of the court: The testimony in this case justifies but one 
conclusion, and that is that the plaintiff undertook to do an obviously 
dangerous act when he attempted to adjust the belt while the shaft 
was running at full speed. “ Where two ways of discharging the service 
are apparent to an employee, one dangerous and the other safe or 
reasonably so, the employee must select the latter, whether or not it is 
the less convenient to him; and if he chooses the former, and the 
danger is such that a reasonably prudent man would not incur the 
risk under the some circumstances, he is guilty of such negligence as 
will bar a recovery, although the master may also have been negligent.” 
20 Am. and Eng. Ency. of Law (2d ed.), p. 146. The habitual careless¬ 
ness of his fellow workmen does not justify the plaintiff, and it will 
not do to say that he lacked proper instructions or appreciation of the 
danger, for he was a mature man who had been working around 
machinery for a considerable length of time before the accident, and 
in addition to this he acknowledges in his testimony that there was 
another and safer way of doing this work than the one he pursued. 
This unfortunate man has suffered a great loss, but, since his own 
carelessness contributed directly to the happening of the accident, 
the law does not permit him to recover, and the case should not have 
been submitted to the jury. 

6. EARLY WORKMEN’S COMPENSATION 

LEGISLATION 

Ives v. South Buffalo Railroad Co . 1 

[Note: This opinion held invalid a New York Statute (work¬ 
men’s compensation act) which held the employer responsible for 
injuries received by workers. The statute was compulsory. As a 
result of this decision many of the various legislatures fell back upon 
an elective compensation plan and provided penalties of from 50 to 
66§ per cent of what the worker would be entitled to recover under 

1 201 N.Y. 271. 


416 THE WORKER IN MODERN ECONOMIC SOCIETY 

the common law with the employers’ defenses abridged by legisla¬ 
tion.—E d.] 

Cullen, C. J., I concede that the legislature may abolish the rule 
of fellow servant as a defense to an action by employee against the 

employer.I concede that the legislature may also abolish as 

a defense the rule of assumption of risk and that of contributory 
negligence unless the accident proceed from the wilful act of the 
employee. I concede that in a work, occupation, or business of 
such a nature that the legislature might prohibit its pursuit or 
exercise altogether, the legislature may prescribe terms under which 
it may be carried on. Plainly, this litigation does not present such 
a case. The legislature could not revoke the franchise it had pre¬ 
viously given to the defendant to operate a railroad.I am 

not prepared to deny that where the effects of the work, even though 
prosecuted carefully, go beyond a person’s own property and injure 
third persons in no way connected therewith, the person for whose 
account the work is done may be held liable for injuries occasioned 
thereby. I also concede the most plenary power in the legislature 
to prescribe all reasonable rules for the conduct of the work which 
may conduce to the safety and health of persons employed therein. 
But I do deny that a person employed in a lawful vocation, the effects 
of which are confined to his own premises, can be made to indemnify 
another for injury received in the work unless he has been in some 
respect at fault. I am not impressed with the argument that “ the 
common law imposed upon the employee entire responsibility for 
injuries arising out of the necessary risks or dangers of the employ¬ 
ment. The statute before us merely shifts such liability upon the 
employer.” It is the physical law of nature, not of government, that 
imposes upon one meeting with an injury, the suffering occasioned 
thereby. Human law cannot change that. All it can do is to require 
pecuniary idemnity to the party injured, and I know of no principle 
on which one can be compelled to idemnify another for loss unless it 
is based upon contractual -obligation or fault. 

7. PROVISIONS OF WORKMEN’S COMPENSATION ACTS 1 

Systems provided for .—Compensation laws may be classified as 
compulsory, elective (optional), or voluntary, depending upon the 
degree of constraint to which employers are subjected to accept the 
compensation provisions. Since these terms will be used repeatedly 

1 Adapted from Bulletin of the Bureau of Labor , Nos. 240 and 275 



ACCIDENTS 


417 


it may be advisable to define them in detail. A compulsory law is 
one which requires every employer within the scope of the compensa¬ 
tion law to accept the act and pay the compensations specified. 
There is no choice. 

An elective act is one in which the employer has the option of 
either accepting or rejecting the act, but, in case he rejects, the 
customary common-law defenses are usually abrogated. In other 
words, the employer is penalized if he does not elect. The employee 
also has the right to accept or reject the act. 

In some states such employments, however, may come under the 
provisions of the law through the voluntary acceptance of the employer 
or the joint election of employer and employee in these exempted 
classes, but the employer loses no rights or defenses if he does not accept. 

Scope of the laws. —No two compensation laws are alike. A 
number of provisions have been adopted quite uniformly by nearly 
all the states, and those of certain states have been taken as models 
by others. But taken as a whole the laws are distinguished more for 
their dissimilarities than for their likenesses. 

How election is made. —Under this head are indicated the methods 
required by the laws for their acceptance or rejection in the 31 states 
where the elective system is provided. In 23 states the employer 
is presumed to accept the act in the presence of positive action rejecting 
it, while under the other 8 elective systems he must institute some 
action indicating his purpose to come under the law. 

The extent to which employers have accepted the compensation 
laws has already been discussed. In most states very few employees 
have rejected the acts. 

Abrogation of defenses: —Under the elective system, as provided in 
31 states, acceptance of the act is induced by the withdrawal or 
modification of the three customary common-law defenses of assumed 
risk, fellow service, and contributory negligence in cases where the 
employer refuses to accept the act. Employers accepting the com¬ 
pensation act are generally exempt from damage suits, while those 
rejecting the act are relieved of the duty of paying compensation but 
are subject to actions at law, with the usual defenses abrogated. 
In cases where an employee rejects the compensation system and 
sues an employer who has accepted it the employer usually retains 
his three defenses. 

Special contracts. —In order to secure to the employee the benefits 
contemplated by the act, without loss by reason of ill-considered and 



418 THE WORKER IN MODERN ECONOMIC SOCIETY 

inadequate settlements, the law usually provides that an employee 
cannot waive his right to compensation benefits or otherwise contract 
with his employer for the purpose of modifying the latter’s liability 
under the law. 

Burden of cost. —With but one exception the burden of cost for 
compensation is entirely on the employer. Under substitute insurance 
or benefit schemes, employees may be required to contribute to the 
fund; but since the laws do not allow the employer to reduce his 
liability, the compensation benefits received by injured employees 
must equal the compensation scale as provided in the act plus the 
employees’ contributions, and consequently there is no real tax upon 
the employee for the statutory benefits. 

Security of payments .■—Since it occasionally happens that employ¬ 
ers become insolvent or meet with a catastrophe and consequently 
are unable to meet their pecuniary obligations, it is important that 
employees be safeguarded from such or similar contingencies by 
suitable legislation providing for security of compensation payments. 
In the 40 states having compulsory insurance laws, such security is 
reasonably assured, provided, of course, that the risk is actually and 
adequately insured. A number of laws limit insurance to authorized 
companies. In most states failure to insure penalizes the employer 
either by subjecting him to a fine or by permitting the employee to sue 
for damages. Usually, also, the law holds the employer and the 
insurer individually liable for compensation. Where monopolistic 
state insurance funds exist, such funds furnish the basis of the 
employee’s protection in this regard. When employers are authorized 
to carry their own risk, they are usually required to furnish satisfactory 
proof of solvency and ability to meet present and future compensation 
payments, or to deposit adequate bonds or other security. Thirty-one 
states permit self-insurance. 

State supervision over insurance and regulation of rates. —The 
adequacy and reasonableness of insurance premiums are of vital 
importance to the employers of the compensation states, since the 
burden of cost depends largely upon the insurance rates. When 
compensation laws were first enacted there existed no satisfactory 
experience upon which to base premium rates. The old employers’ 
liability experience was unsatisfactory and the experience of foreign 
countries was to some extent inapplicable. Called upon suddenly 
to produce a schedule of rates, with no reliable data as a basis, the 
insurance carriers were forced to rely upon their “ underwriting 


ACCIDENTS 


419 


judgment,” and the rates thus formulated were generally too high. 
Since then, however, with the accumulation of experience and the 
entrance of the state into the insurance field as a competitor, rates 
have been established more nearly in accordance with the hazards of 
industry. 

Injuries covered.- —Compensation laws are limited not only as to 
employments covered and persons compensated, but also as to injuries 
covered. No state holds the employer liable for every injury received 
by the employee. As a rule, the injury must have been received in 
the course of the employment and must have resulted as a natural 
consequence therefrom; usually, also, those due to the employee’s in¬ 
toxication, willful misconduct, or gross negligence are not compensable. 

Accidents: —What constitutes an injury ? In most states an injury 
is limited to what is commonly known as an accident. There must 
be a sudden and tangible happening, producing an immediate or 
prompt result, and occurring from without. 

Arising out of and in the course of employment. —The next limitation 
of compensable injuries is the condition under which they occur. 
No state compensates for all injuries, irrespective of the time and place 
of their occurrence. In every state a compensable injury must happen 
in the course of the employment, and in all but four states it must 
arise out of or result from the employment. 

In other words, the injury must result from a hazard of the em¬ 
ployment, not merely one of the hazards of existence.' The Commis¬ 
sions and courts generally have been liberal in their interpretations 
of this phrase. Granted a causal connection between injury and em¬ 
ployment and compensation is usually allowed. Awards have even 
been granted in the case of a watchman who was shot by a burglar 
and where an employee was killed by an intoxicated fellow-worker. 

Exemptions due to eynployee's fault. —Most of the states do not 
grant compensation for injuries occasioned in whole or in part 
through some gross fault of the employee. Four states, however, 
have not accepted this principle and allow compensation regardless 
of the employee’s negligence. Thirty-five states withhold compensa¬ 
tion if the injury was caused by the willful intention of the employee to 
injure himself or another; 30 deny compensation if injury is due to 
intoxication; 16 if caused by willful misconduct; and 12 if employee 
is guilty of violation of safety laws or removal of safety appliances. 

Waiting period.—In most states an injury, to be compensable, 
must cause disability for a certain length of time, generally one week, 


420 


THE WORKER IN MODERN ECONOMIC SOCIETY 


and no compensation is paid during that time. This noncompensable 
preliminary period is known as the “waiting period.” It is main¬ 
tained, especially by organized labor, that a two weeks’ waiting 
period is too long, since the large majority of industrial injuries cause 
disability of less than two weeks. 

The loss of even a week’s wages to the average workman would 
create a hardship or at least cause inconvenience to his family. On 
the other hand, several objections are advanced against the abolition 
of the waiting period altogether. There is the supposed danger of 
increased malingering; another objection is the undue increase in 
administrative expenses. 

The question arises, however, as to the extent to which an employee 
should be compensated for his losses sustained as a result of the injury. 
On the one hand it is maintained that the entire cost of rehabilitation 
and restoration of earning capacity, including full wages, or more if 
necessary, and adequate medical treatment, should be borne by the 
industry; and if the employee is totally and permanently incapacitated 
he should receive an adequate life pension. On the other hand it is 
contended that only major injuries should be compensated for, and 
then only for a small part of the wage loss. In most of the states the 
compensation scale has been based, in theory at least, upon the loss 
of earning power of the injured workman, while a number of states, 
notably Oregon and Washington, have based their awards upon 
the worker’s need rather than his loss of earning capacity. 

Scale .-—The compensation scale is usually based upon the earnings 
of the injured employee, ranging from 50 to 66| per cent of his weekly 
or monthly wages at the time of injury or for a prescribed period 
preceding it. 

The weekly benefits are, as a rule, also subject to a maximum and 
a minimum limit. The period during which compensation is paid 
varies also, the usual provision in (^,se of death being from 5 to 8 
years, and in case of disability payment during disability, with a 
maximum of 300 to 500 weeks, and frequently during life in case of 
permanent total disability. A further limitation may be prescribed 
stipulating that the total compensation shall not exceed a certain 
fixed amount. 

Percentage of wages .—In all but three states compensation is based 
upon wages. A number of states, however, provide for fixed lump 
sums for certain injuries, but apply the percentage system to all 
others. In most of the states the prescribed percentage remains 


I 


\ 


ACCIDENTS 421 

1 

uniform for all injuries, but in several it varies with conjugal condition 
and number of children. This variation is on the increase. 

Weekly maximum and minimum: —The compensation benefits 
based upon percentage of wages are usually modified by weekly 
maximum and minimum limits, which may materially affect the 
amounts, though to what extent depends, of course, on the wage 
scale. Two states have no maximum or minimum limits; all these 
are far Western states, where wages are presumably relatively high. 
Seven states have a maximum of $15 or over, two states have a 
maximum of $14, nine states have a maximum of $12, twelve of $10, 
one has a maximum of $8, and one of $7. 

Deaths.- —The benefits for death in most cases approximate three 
or four years’ earnings of the deceased employee. The methods 
provided for determining compensation for death vary considerably. 
Two states provide for fixed absolute amounts without reference to 
wages or length of time. Six states provide for annual earnings for 
three or four years. The large majority of states, however, apply a 
wage percentage for specified periods. 

Total disability. —A few states recognize the fact that a perma¬ 
nently disabled workman is a greater economic loss to his family 
than if he were killed outright at the time of the accident, and allow 
in case of permanent total disability a larger amount of compensation 
than in case of a fatal accident. 

Partial disability. —The working out of a satisfactory basis of 
compensation benefits for injuries causing partial disability has 
been most difficult. To provide for such contingencies two methods 
have generally been adopted. One method found in practically all 
of the states is the payment of an award based on the percentage of 
the wage loss occasioned by such disability, payments continuing 
during incapacity but subject to maximum limits. The second 
method is the adoption of a specific schedule of injuries for which 
benefits are awarded for fixed periods, the payments being based upon 
a percentage of wages earned at the time of the injury. 

8. MERITS OF DIFFERENT INSURANCE SYSTEMS 1 

Cost: —The cost of compensation insurance to employers under 
different insurance systems may be indicated by their expense ratios. 
The average expense ratio of stock companies is approximately 38 

1 Adapted from Carl Hookstadt, Comparison of Workmen's Compensation 
Insurance and Administration , April, 1922, p. 21. (Government Printing Office, 
1922.) 


422 


THE WORKER IN MODERN ECONOMIC SOCIETY 


per cent; of mutual companies, about 20 per cent; of competitive 
state funds, about 10.6 per cent; and of exclusive state funds, about 
4 per cent. Under an exclusive state fund, therefore, the cost to 
employers would be 30 per cent less than under stock insurance and 
16 per cent less than under mutual insurance. The total saving to 
insured employers of the United States, if all were insured in exclusive 
state funds, would be over $30,000,000 annually. 

Service .—As regards service, comparisons are difficult because of 
the great variations among different insurance systems. As to 
promptness of payments there is little to choose among the different 
types of insurance carriers. Some of the state funds pay promptly 


TABLE LXXI 

Expenses of Compensation Administration in 
United States (in Round Numbers)* 


State 

Estimated Number 
of Employees 
Subject to Act 

Total Expenses of 
Administration 

Exclusive fund states: 

Ohio. 

1,000,000 

600 ,OOO 

872,000 

$ 280,000 

1,340,000 

2,880,000 

Competitive fund states: 

Michigan. 

Private insurance states: 

Illinois. 



* Compiled from Bulletin No. 301, U.S. Bureau of Labor Statistics, 1922. 

(In other words, the per capita expense of administration in Illinois is over 
10 times what it is in Ohio.) 


while some do not. The same thing may be said with respect to stock 
and mutual companies. However, a comparison of one of the best- 
managed state funds in this respect with one of the best-managed 
private companies shows that the state fund is more prompt in its 
payments than the private company. A significant fact developed 
by the investigation is that self-insured employers, whom one would 
expect to pay promptly, are no more prompt in this respect than either 
state funds or private carriers. As regards liberality of payment, 
most of the state funds are more liberal in this respect than either 
stock or mutual companies. As regards accident prevention some 
of the private companies are doing excellent safety work, whereas few 
of the state funds have done any effective safety work. 

Security :—Thus far no injured workman has lost his compensation 
because of the insolvency of state insurance funds, nor has any large 
mutual company become insolvent. On the other hand there have 












ACCIDENTS 


423 


been several disastrous failures of private stock companies during 
the last three or four years. These failures have resulted in hundreds 
of thousands of dollars in unpaid claims. As regards self-insurance, 
the experience of 21 states has been reported to the United States 
Bureau of Labor Statistics. In 15 of these states no self-insured 
employer has failed or gone into the hands of a receiver. 

9. SHORTCOMINGS IN WORKMEN’S COMPENSATION 

a) EFFECT OF WEEKLY MAXIMUM IN REDUCING 
COMPENSATION BENEFITS 1 

Most of the compensation laws provide that the compensation 
shall equal a certain percentage of the employee’s wage received at 
the time of the injury. This percentage ranges from 50 to 66|. 

TABLE LXXII 

Percentage Compensation Was of Wages in 4,579 
Temporary Disability Accidents in 
Pennsylvania in 1920* 


Percentage Compensation 

Was of Wages 

Temporary Disability 
Accident Cases 

Number 

Percentage 

1 and under 5 per cent. 

85 


i -9 

5 and under 10 per cent. 

385 


8.4 

10 and under 15 per cent. 

538 


11.8 

15 and under 20 per cent. 

663 


14-5 

20 and under 25 per cent. 

692 


i 5 -i 

25 and under 30 per cent. 

693 


i 5 -i 

30 and under 35 per cent. 

452 


9.9 

35 and under 40 per cent. 

442 


9.6 

40 and under 45 per cent. 

294 


6.4 

45 and under 50 per cent. 

197 


4-3 

50 and under 55 per cent. 

105 


2-3 

55 and under 60 per cent. 

21 


•5 

60 and under 65 per cent. 

8 



65 and under 70 per cent. 

1 



70 and under 75 per cent. 

1 

> 

•3 

75 and under 80 per cent. 

1 



80 and under 85 per cent. 

D 



Total (22.7 per cent). 

4,579 

100.0 


* Data prepared by the Pennsylvania Rating and Inspection Bureau. 


1 Adapted from Carl Plookstadt, Comparison of Workmen's Compensation 
Insurance and Administration , April, 1922, pp. 66-67. (Government Printing 
Office.) 
































424 


THE WORKER IN MODERN ECONOMIC SOCIETY 


However, practically all of the states, in addition to the percentages, 
have weekly maximums beyond which the amount of compensation 
cannot go. This not only limits the amount of compensation still 
further but virtually vitiates and nullifies the percentages. For 
example, it is misleading to speak of a state paying 66f per cent of 
wages, as is the case in New Jersey, when the same law also provides 
a weekly maximum of $12. Therefore, instead of receiving 60, 65, 
or 66§ per cent the injured workman may actually receive only 20, 
25, 30, or 35 per cent of his wages. 

An extreme illustration is shown in Table LXXII. 

It will be noted that the number of cases in which the injured 
workman received 60 per cent (80 being the statutory percentage in 
Pennsylvania) or more was only 0.3 of 1 per cent. The number of 
cases in which the workman receives 50 per cent or more was only 
3.1 per cent. Taking the 4,779 cases as a whole, the compensation 
was 22.7 per cent of the wage loss. 

b) ADMINISTRATION AND POLITICS 1 

Politics .—One of the factors which militates against efficiency 
of administration in industrial commissions is our system of partisan 
political appointments. The personnel of commissions is constantly 
changing with the change of political administration. In the state 
of Washington, for example, there have been 17 commissioners since 
the creation of the commission in 1911. This continual change in 
personnel prevents a continuity of policy. Commissioners frequently 
hesitate to undertake important and constructive policies when their 
probable tenure of office is only three or four years. Furthermore, this 
change in personnel affects not merely the commissioners themselves 
but the entire staff of the commission. Another manifestation of this 
political system is the interference on the part of large and influential 
employers with the duties and policies of the commission; for example, 
the employer in order to prevent the commission from carrying out 
its policy will appeal to the governor or other political authorities, 
who, in turn, will diplomatically suggest to the commission to go a 
little slow in taking drastic action against the employer. As a result 
the commission, because it is a part of the political administration, 
will hesitate to antagonize influential employers. 

1 Ibid., p. 5. 


ACCIDENTS 


425 


c) RATING METHODS AND LACK OF EXPERIENCE 1 

A discussion of workmen’s compensation insurance rates would be 
incomplete without some reference to merit rating although it is but 
supplementary to the manual rating system. 

There are two forms of merit rating in use in workmen’s compensa¬ 
tion insurance; they are experience rating and schedule rating. These 
differ fundamentally in their method of approach; one is retrospective, 
the other prospective; one depends upon the experience of the past 
to gauge the hazard of the future, the other appraises the hazard by 
means of an actual physical inspection and analysis. 

Schedule rating .—It is the function of schedule rating to discover 
the physical hazards of individual risks and to value these hazards 
from a rate making point of view. 

In practice the schedule is used in conjunction with a detailed 
inspection report which indicated the presence or absence of the various 
elements named in the schedule. Application of debits and credits 
fixed by the schedule to the particular conditions of the inspection 
report results in a modification of the manual rate, raising it, if on the 
whole the conditions are worse than those upon which the manual 
rate is predicated, and lowering it, if, on the other hand, the conditions 
are better. 

The schedule commercializes safety and thus aligns the economic 
motive with the humanitarian. But furthermore, a schedule definitely 
directs the efforts of the safety engineer to those hazard points which 
are serious and, by placing the proper relative value upon each item, 
insures prior attention to those conditions which are most dangerous. 

Experience rating .—Experience rating attacks the problem of 
rating individual risks in quite a different way. 

The loss history of the risk is used as a basis of arriving at rates 
because so far in the development of workmen’s compensation insur¬ 
ance, this is the only basis which has been found which measures 
and combines the effect of the intangible hazards of individual risks. 
Unfortunately experience rating has its own limitations. For one 
thing it measures the future by the past and in some cases that is 
not a safe guide. Its most serious limitation, however, arises out of 
the fact that in the majority of cases the amount of experience is 
not sufficient to be entirely conclusive. 

1 Adapted from Report of the Work of the Augmented Standing Committee on 
Workmen’s Compensation Insurance Rates , 1917, pp. 50-56. (Issued by the 
National Workmen’s Compensation Service Bureau, March, 1918.) 


426 


THE WORKER IN MODERN ECONOMIC SOCIETY 


d) ATTENTION TO REHABILITATION 1 

One of the great benefits derived from our recent war experience 
has been the development by the United States Government of plans 
for re-educating and rehabilitating soldiers and sailors crippled in 
service, and the lessons and experience being developed by the Federal 
Vocational Board are now being applied under workmen’s compensa¬ 
tion acts to the rehabilitation of men disabled in industry. 

In the industrial rehabilitation act, recently passed by Congress, 
Federal financial aid is now afforded the states if they will participate 
in relieving crippled workmen. This work properly belongs with 
industrial accident boards and commissions, as they are more closely 
in touch with industrial injuries than any other agency of the state 
to which the expenditure of funds for this purpose may be intrusted. 

Without waiting for the industrial rehabilitation act, a number 
of states, notably California, New York, Massachusetts, Illinois, 
Pennsylvania, New Jersey, Minnesota, and Oregon, have proceeded 
independently to provide for re-education of injured workers. In 
some states a state appropriation is made available for this purpose. 
In others a state appropriation, to be united with the Federal appropri¬ 
ation under the industrial rehabilitation act, is now being proposed. 
In others, the imposition upon industry of the burden of rehabilitating 
injured employees under the provisions of the compensation acts has 
been adopted upon the theory that the burden of rehabilitation is as 
much an industrial charge as that of paying the older forms of com¬ 
pensation. In all states the money raised for rehabilitation is put 
into a special fund to be expended by the proper state authority, 
under wide discretionary powers, similar to those exercised by the 
Federal Board for Vocational Education, instead of being awarded 
to employees by specific statutory direction. 

e) lacks in workmen’s compensation 2 

The most evident lack in workmen’s compensation legislation in 
the United States is the entire absence of any compensation legislation 

1 Adapted from Will J. French: “The Trend of Workmen’s Compensation— 
A Glance at Compensation History, Past and Present,” Proceedings of the Seventh 
Annual Meeting of the International Association of Industrial Accident Boards and 
Commissions , June, 1921, p. 115. (Government Printing Office, 1921.) 

2 Adapted with permission from Royal Meeker, The American Labor Legislation 
Review, IX, 35-50. (Published by American Association for Labor Legislation, 
1919.) Facts revised to November, 1922, by editor. 


ACCIDENTS 


427 


in the District of Columbia and in six of the forty-eight states compos¬ 
ing the union. The six delinquent states are North Carolina, South 
Carolina, Florida, Mississippi, Arkansas, and Missouri. 

Quite as flagrant as the failures just alluded to is the failure to 
provide adequate compensation for all railroad employees either by 
the federal government or by the different states. 

Even more important in point of numbers involved are the exclu¬ 
sions, explicit or implicit, of farm hands, casual laborers, domestic 
servants and workers in so-called non-hazardous industries or in 
establishments employing less than a specified minimum number of 
workers. All these workers should, of course, be included under the 
workmen’s compensation laws. 

According to estimates made by Carl Hookstadt of the United 
States Bureau of Labor Statistics, out of the forty jurisdictions now 
having compensation laws, ten, including Porto Rico and Alaska, 
exclude more than half of the workers within their borders, while 
twenty-seven exclude at least one-quarter of their workers. These 
estimates are based on the assumption that all employers who may 
elect to come under the compensation laws do so elect. This gives 
a greatly exaggerated figure in many instances. It is probable that 
nearly one-half of all employees in the states having compensation 
laws do not come under those laws at all. It is highly desirable that 
all compensation laws be made compulsory and that they be extended 
to include all employees. With a state fund, it will be feasible to 
provide ample guarantees for the payment of all compensation claims 
under such all-inclusive laws. Insurance should be sold to small 
employers such as farmers, cobblers, small shopkeepers, and the like 
so as to entitle them to compensation benefits in case of their 
disability. 

State insurance funds .—The only way compensation benefits can 
be extended to all the excluded classes is by means of exclusive public 
or so-called “state” insurance or by state-aided or monopolistic 
mutual associations. We have no place in America for monopoly 
unless it be a public monopoly. In justice to the worker therefore it 
becomes necessary to advocate public or “state” insurance to the 
exclusion of all other kinds of insurance. All the enormous advantages 
in economy and universality are lost or diminished if private competing 
methods are permitted to enter. A competitive state fund may be 
very little less expensive than a private profit-seeking stock casualty 
company. 


428 


THE WORKER IN MODERN ECONOMIC SOCIETY 


At the same time we should surely devote a large proportion of 
our time, energy and intelligence to teaching the great truth that it 
is better and cheaper to pay competent doctors and surgeons to save 
lives, limbs and bodily functions than to pay compensation therefor. 

The workman who suffers injury must be restored physically, 
mentally and morally as quickly and' completely as possible. When 
he has been as completely rehabilitated as possible, he should be put 
back into industry. This may and generally will involve his retraining 
either for his old job or a new job better adapted to his particular 
disability. The industrial accident boards and commissions must 
have a voice in this work of restoration, retraining and re-employment 
of injured workers. 

Waiting period. —The waiting period before compensation is 
allowed is much too long. One week is a long time for a workingman’s 
family to be cut off from all or the principal part of its means of living. 
The malingerer is for the most part a figment of an overheated imagina¬ 
tion. He doesn’t exist in the swarms and hordes that have been 
described to us. The old federal employees’ compensation act paid 
full wages and had no waiting period if the injured employee were 
disabled for fourteen days or more. Yet I am convinced that there 
was very little malingering in order to secure full wages during dis¬ 
ability. If we would spend less time speculating on the moral derelic¬ 
tions of the “laboring classes” and trying to protect our pocket books 
from the more or less mythical malingerer and get down to hard work in 
behalf of decently adequate compensation laws for the protection of the 
great mass of workers, we would be able to accomplish much more good. 

10. ACCIDENT PREVENTION: EFFORTS OF EMPLOYERS 
SINCE ENACTMENT OF COMPENSATION 

LEGISLATION 1 

In 1906 the first exhibit of safety appliances in this country was 
held under the auspices of the New York Institute for Social Service. 
In 1912 a small group of engineers met in Milwaukee and launched the 
National Safety Council, which has taken the lead in the war against 
accidents. In four years’ time it included 15,400 representatives 
from 3,293 firms, covering 4,500,000 workmen. 

There are a number of reasons for this remarkable interest. 
Workmen’s compensation laws enacted in most of the States have divided 

1 Adapted with permission from Frankel and Fleisher, The Human Factor in 
Industry , pp. 136-40. (The Macmillan Co., 1920.) 


ACCIDENTS 


429 


the loss by charging a percentage to the employer. These laws have not 
only transferred the cost of accidents from employe to employer , but by 
requiring systematic reporting of accidents have furnished necessary 
data as to their extent and seriousness. These in turn have led to safety 
campaigns. 

Possibility of preventing accidents .—Experience has shown that at 
least 50 per cent of the industrial accidents are preventable. Twenty- 
two of the foremost industrial concerns of the United States report 
an average reduction of 54 per cent in yearly accidents after the 
introduction of organized safety work. The International Harvester 
Company, the Neenah Paper Company, the Illinois Steel Company, 
and the Milwaukee Coke and Gas Company each reported a reduc¬ 
tion of more than 80 per cent. In eighteen months the Port Huron 
Engine and Thresher Company, in a plant employing between three 
and four hundred people, reduced accidents 56 per cent and cut 
down compensation costs from $2,864 in 1913-1914 to $1,263 i n 
1914-1915. 

Safety devices .—To accomplish these results many ingenious safety 
devices have been developed to protect workmen. Glass hoods catch 
fine steel splinters from the emery wheel; goggles cover the metal 
grinder’s eyes; “congress shoes” with steel plated toes protect the 
molder from a scalding should he spill the hot metal he is carrying; 
“safety nets” catch the falling workmen, tools, or materials in con¬ 
struction work; automatically locking doors protect elevator shafts 
in office building and factory, etc. 

Importance of personal equation in the reduction of accidents .— 
Mechanical appliances play an essential but comparatively small 
part in accident prevention. The experience of the Illinois Steel 
Company, one of the pioneer companies in safety work, has led them 
to evaluate the different methods of attacking the accident problem. 
Only 17J per cent of the total reduction in accidents is attributed to 
the introduction of mechanical appliances, and another 8 per cent 
to improved lighting and cleanliness. Education by means of lectures, 
or bulletins, or instruction while at work, was held accountable for 
jo per cent of the reduction and the organization of Safety Committees 
for 20 per cent. This experience is typical. 

Necessity of arousing workers’ interest in “Safety First .”—If only 
25 per cent of all industrial accidents can be traced directly to 
unguarded or dangerous machinery and equipment it is obviously 
necessary to stimulate the interest of the employes in “Safety First.” 


430 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Employees’ safety committees. —No method is so successful in arous¬ 
ing the workers’ interest and watchfulness as the formation of rotating 
safety committees. During the first three years of the safety work of 
the Chicago Northwestern Railway Company, the men who had served 
on committees reported 6,000 points of danger, and 97 per cent of their 
suggestions were found practical and adopted. 

Safety committee meetings. —The weekly meetings are held on 
company time at company expense for the discussion of the previous 
week’s accident record, and the study of bulletins and safety literature. 
Every sixty days the company gives the committee a smoker and 
distributes prizes for the best safety suggestions. 

It is relatively simple in the initial stages of a safety campaign to 
arouse the workers’ interest. It is more difficult to retain this interest 
until the individual has formed the “ safety habit.” To do this, all 
conceivable means of popularizing “safety first” are needed. 

PROBLEMS 

t. “In modem society accidents are likely to prove in the long run more 
costly than wars.” What facts can be given to support this conjecture ? 

2. “In 1919 there occurred in industry about 23,000 fatal accidents, about 
575,000 non-fatal accidents causing four weeks or more of disability 
and 3,000,000 accidents causing at least one day’s disability.” Granted, 
who paid the cost of these accidents ? 

3. What is the distinction between accident frequency rates and accident 
severity rates ? 

4. In what particulars do the accidents of modern industrial society tend 
to differ from those in medieval society ? 

5. Why have workmen’s compensation laws taken the place of the common 
law rules of employers’ liability? Was there real necessity for work¬ 
men’s compensation in the eighteenth century ? 

6. What were the common law defenses of the employer to a suit by an 
employee for physical injuries sustained while in his employ ? 

7. “Common law defenses are obstacles to the continuous co-operation of 
labor and capital.” Discuss the truth of this statement. 

8. “He who engages in the employment of another for the performance of 
specified duties and services for compensation, takes upon himself the 
natural and ordinary risks and perils incident to the performance of 
such services, and, in legal presumption, the compensation is adjusted 
accordingly.” Is the presumption sound? Is it socially desirable? 
Why, or why not ? 

9. “The difficulties with the operation of the common law concepts in 
regard to accidents can be summarized under three headings: (a) the 


ACCIDENTS 


431 


law’s delay, ( b ) the difficulty of proving the employer at fault, (c) the 
excessive amount of litigation.” Do you agree? Would you add other 
headings ? 

10. “The old method assumed that responsibility for accidents was personal; 
either the employer or the employee was to blame.” Comment. 

11. What are the causes for accidents? 

t2. Are accidents a result of the machine industry of today or of the machine 
plus the gain spirit ? 

13. “Generally speaking, industrial accidents are due to inadequate social 
control.” Explain and discuss. 

14. “Men should not work under the traveling cranes when the crane 
is carrying heavy loads overhead. The rules forbid it; yet they 
break the rules.” Isn’t the worker, therefore, responsible for such 
accidents ? 

15. Do you think it fair that the employer should be compelled to pay 
for accidents which have been caused by the carelessness of the 
worker ? 

16. “Workmen’s compensation is not as important as a change in managerial 
methods which will enable a worker to obey the safety regulations with¬ 
out meeting with disfavor of those who are held responsible for the 
quantity of output.” Criticize. 

17. Since the prevention of accidents by traveling cranes depends upon skill 
and care, experience, caution, alertness, and co-operation, according to 
the Pittsburgh Survey, should we expect those qualities of eighteen- 
year-old boys, and ignorant foreigners ? Is society playing fair m allow¬ 
ing them to hold such positions ? 

18. “The cost of accidents should be placed upon those who are directly 
responsible for them.” “The cost of accidents should be placed upon 
those that are in a position to see to it that accidents do not occur.” 
Illustrate these two statements. 

19. If a worker is injured under workmen’s compensation he receives com¬ 
pensation without going to court even though he is partially to blame. 
Why doesn’t the worker injure himself in order to get benefits ? 

20. Outline the main features of most workmen’s compensation acts. 

21. Are all occupations included under workmen’s compensation acts? 
Name some that are generally excluded. Should all be included? 
Why or why not ? 

22. Which do you favor and why: (a) workmen’s compensation and no 
provision for insurance, ( b ) workmen’s compensation and private 
insurance, ( c ) workmen’s compensation with optional insurance in 
either a state fund or in private companies, (d) workmen’s compensa¬ 
tion and compulsory insurance in a state fund ? 

23. “Workmen’s compensation is unfair to the employer who may be 
beggared by several large awards to injured workmen.” Comment. 


432 


THE WORKER IN MODERN ECONOMIC SOCIETY 


24. “What I want is accident prevention, not accident insurance. We need 
therefore to develop safety methods, not to provide workmen’s com¬ 
pensation.” Comment. 

25. “The ‘Safety First’ movement is the child of workmen’s compensation.” 
How can this be argued ? Do you agree ? 

26. “Both the minimum wage and workmen’s compensation are invasions 
of the right of the individual to contract for his labor as he deems best.” 
Comment. 

27. “The employer alone reaps the benefit of the worker’s efforts, and there¬ 
fore he alone should bear the entire cost of the latter’s accident insur¬ 
ance.” Criticize. 

28. “Insurance spreads the cost of industrial accidents over the careful 
and careless alike provided a man’s carelessness does not amount to 
utter recklessness.” Comment. 

29. Explain the relation of “merit rating” in compensation insurance to 
the promotion of safety. 

30. What is causing the shift of responsibility for accident and its conse¬ 
quences from the individual and his family to society ? 

31. “The teaching of English is closely associated with safety.” In what 
way ? 

32. “Statistics can prevent accidents.” How? ' 

33. What are meant by the terms “exclusive” and “competitive” state 
funds. Which is to be preferred ? 

34. “The records show that the state funds (1) do business 25 to 30 per 
cent.cheaper than stock companies; (2) are financially sound and have 
adequate reserves and surplus; (3) pay compensation as promptly 
as private carriers or self-insurers; (4) are more liberal in settling claims 
and appeal fewer cases to the commissions or courts; and (5) perform 
little safety and inspection work in comparison with private companies.” 
Granted, what value do you place on these facts ? 

35. “Under the competitive plan both the insurance company and the 
state commission must receive and investigate compensation claims, 
which results in unnecessary duplication of effort.” What does this 
suggest ? 

36. “Under the exclusive state fund, the state pays if an accident occurs 
within the industry covered by the law, and the workman does not 
suffer because the employer has not paid his premium.” 

37. “One of the factors which militates against efficiency of administration 
in industrial commissions is the system of partisan political appoint¬ 
ments.” How could this be changed? Discuss some of the dis¬ 
advantages of short terms of office for industrial commissioners. 

38. What is meant by “accident” cost and “compensation” cost? 

39. “Practically all of the compensation states except those having strictly 
exclusive state funds permit employers to carry their own risk subject 
to such safeguards as the law may prescribe.” Why? 


ACCIDENTS 


433 


40. “ Four systems of claim procedure are in use in the various compensation 
states. These are: (1) claim system, (2) voluntary-agreement or direct- 
settlement system, (3) adjudication of cases on basis of employer’s and 
insurer’s reports only, and (4) hearing-system.” What are the char¬ 
acteristics of each ? Advantages ? 

41. Some states collect only sufficient premiums to meet the cost of accidents 
as they occur. Is this a wise procedure ? 

42. The inadequate auditing of employers’ pay-rolls is a serious problem to 
the state funds, and thousands of dollars of premiums are lost because 
these pay-rolls are not audited regularly, if at all. Why should this 
occur? Do the states provide sufficient forces for regular auditing of 
pay-rolls ? 

43. There are four distinct methods of computing the average earnings of 
an employee who has been engaged at work on a full-time basis: “(1) 
divide the earnings for year preceding the injury by 52; (2) multiply 
the average daily wage at the time of the injury by 300 and divide by 
52; (3) divide the earnings for the 6 months preceding the injury by 
26; (4) multiply the average daily wage for the 6 months preceding the 
injury by 5I, 6, 6|, or 7, according to the number of days in the 
employee’s customary week.” Which method is most desirable ? Why 
such different methods in the various states ? 

44. The Pennsylvania Workmen’s Compensation Board has laid down the 
following rule: “In ascertaining the weekly wage of an employee for 
compensation purposes, from the total number of working days during 
the preceding 6 months should be deducted all (1) Sundays, (2) legal 
holidays, (3) half-holidays, (4) and days employee was absent through 
no fault of his own, including days when the plant or mine was idle 
because of a strike, and the number thus obtained should be divided 
into the total earnings for the six months’ period. The average daily 
wage thus obtained shall then be multiplied by sJ, 6, 6§, or 7.” Will 
this method of computation give the average weekly wage, and will the 
compensation given be comparable to the amount usually earned by 
an employee ? 

45. “The extra or additional items of income, besides the regular wages 
paid to an employee by his employer, may be grouped into six classes: 
overtime earnings, board and lodging, etc., tips, gratuities, supplies, 
and tools, etc., and special expenses incurred by the nature of the 
employment.” How are these items regarded under workmen’s com¬ 
pensation laws ? 

46. Should the racing winnings of an automobile driver be included as a 
part of his wages ? 


CHAPTER XV 

OCCUPATIONAL DISEASE AND SICKNESS 

i. OCCUPATIONAL DISEASES AND WORKMEN’S 
COMPENSATION ACTS 1 

Of the 46 compensation jurisdictions in the United States only 
ten provide compensation for occupational diseases. In the remain¬ 
ing 36, occupational diseases are excluded, in theory at least, from the 
operation of the compensation acts. This exclusion has been brought 
about (1) by limiting the scope of the law to injuries by “accident,” 
(2) by adverse rulings of the courts and commissions, and (3) by 
express provisions in the compensation acts themselves. 

Of foreign countries, Great Britain and most of the Canadian 
Provinces provide compensation for occupational diseases, limited, 
however, to certain diseases and processes stipulated in the schedule. 
In most of the European countries occupational diseases are taken 
care of under their sickness and invalidity insurance acts. 

The failure to include occupational diseases in the early American 
acts was due, in part at least, to lack of information as to their preva¬ 
lence and probable cost. At the time there existed no reliable statis¬ 
tical data showing the number of industrial diseases in the United 
States. 

Since then the experience under the United States, California, 
and Massachusetts compensation acts, together with investigations 
made by the National Council on Workmen’s Compensation Insur¬ 
ance, have thrown considerable light upon the subject. The several 
reports and investigations show that the maximum cost of occupational 
diseases, if included in workmen’s compensation acts, would not be 
greater than 2 per cent of the aggregate cost of industrial accidents. 
The cost would probably be a great deal less than 2 per cent. The 
National Council has consequently recommended that no special 
factor be used in the rates to measure the cost of such diseases. The 
committee came to this conclusion because the experience of California 
and Massachusetts showed no radically different results than the 
experience of other states where the occupational disease hazard is 

t 

1 Adapted from Carl Hookstadt, Monthly Labor Review , XII, No. 2 (February, 
1921), 154-56. (Government Printing Office, 1921.) 


434 


OCCUPATIONAL DISEASE AND SICKNESS 


435 


not specifically covered by the statute. “Furthermore,” continued 
the committee, “a large proportion of so-called occupational disease 
cases have already been carried into the experience. Such cases as 
lead poisoning and anthrax have, in many jurisdictions, been classified 
as accidents and compensated under the terms of the workmen’s 
compensation law provided they occurred under certain conditions.” 

The conclusion of the actuarial committee to disregard the 
occupational disease factor in the computation of insurance rates is 
particularly significant in view of the fact that heretofore insurance 
rates had been loaded 2 per cent in order to take care of the occupa¬ 
tional disease hazard. 

Occupational diseases may be classified according to cause and 
nature of injury, as follows: 

L i. Diseases due to gradual absorption of poisons (lead poisoning). 
^ 2. Diseases in which the poison or germ enters the system through 
a break in the skin (anthrax). 

3. Skin affections from acids or other irritants (eczema, derma¬ 
titis). 

^4. Diseases due to fumes or dust entering the system through 
respiratory organs (tuberculosis, gas poisoning). 

*^5. Diseases due to vibrations or constant use of particular members 
(neuritis, telegrapher’s cramp, housemaid’s knee). 

6 . Miscellaneous diseases (caisson disease, miner’s nystagmus). 

There are, however, two additional classes of diseases, non- 
occupational in character, for which compensation is usually granted: 
(1) Those diseases, such as typhoid fever, erysipelas, pneumonia, and 
ivy poisoning, which arise out of and are proximately caused by the 
employment. These diseases, to be compensable, however, must 
have had their origin in the employment and must be definitely 
traceable to it. (2) Those diseases which either result from an accident 
or are aggravated, accelerated, or developed by the accident. In 
these cases compensation is awarded not for the disease per se but for 
the results of the accident. Had the accident not occurred the disease 
would presumably never have developed; consequently the resulting 
disability is justly attributable to the accident. 

However, in many states in which the compensation laws do not 
cover occupational diseases, the courts and commissions in actual 
practice have awarded compensation for most of the diseases enume¬ 
rated above. They undoubtedly feel that an employee who contracts 
an occupational disease is just as much entitled to compensation as 


436 THE WORKER IN MODERN ECONOMIC SOCIETY 


one who sustains the loss of an arm. Consequently, in their decisions 
under the law they have no doubt been influenced by their desire to 
remedy as far as possible the economic injustice of the statutes. 

The guiding principle adopted by most of the courts and com¬ 
missions is stated by the Pennsylvania Workmen’s Compensation 
Board in awarding compensation for dermatitis due to the fortuitous 
presence of poison in hides handled by the employee, as follows: 

Where injuries received in the course of employment are of untraceable 
inception and gradual and insidious growth and cannot be traced to having 
been received at some certain time, and in which there is no sudden or 
violent change in the condition of the physical structure of the body, they 
must be regarded as the results of an occupational disease. However, if 
the disease can be traced to some certain time when there was a sudden or 
violent change in the condition of the physical structure of the body, as, 
for instance, where poisonous gases were inhaled which damage the physical 
structure of the body, it is an accident within the workmen’s compensation 
act of 1915, and is compensable. 

Thus it will be seen that the additional cost to a state desiring to 
include occupational diseases in its compensation law will not be 
materially increased because many of such diseases are already being 
compensated, not as diseases but as accidents. 

[Note: It has been estimated that approximately 5,600,000, or 
17 per cent of American wage earners of both sexes, work under 
conditions more or less injurious to health because of atmospheric 
impurities caused by dust, fumes, or gases.— Ed.] 

2. SICKNESS AMONG WAGE-EARNERS 1 

In the United States, as in other countries before comprehensive 
systems of health insurance were instituted, complete morbidity 
statistics are lacking. Every investigation which has been made, 
however, shows a large amount of disability due to sickness among 
working people. 

A community sickness survey by the Metropolitan Life Insurance 
Company, for instance, resulted in the estimate that in Rochester, 
N.Y., of each 1,000 males 15 years or over, 23.3 are ill at any one time, 
and that of each 1,000 women 15 years or over, 25.7 are so ill at any 
one time that they are unable to work. This means for men an average 
of 8.5 days of disability a year and for women 9.4 days. In 1901 a 

1 Taken from American Labor Legislation Review , VI, 155-238. (Published by 
the American Association for Labor Legislation, 1916.) 


OCCUPATIONAL DISEASE AND SICKNESS 


437 


federal investigation of 25,440 workmen’s families showed that 11.2 
per cent of heads of families were idle during the year solely on account 
of sickness and that the average period of such unemployment was 
7.71 weeks, or an average for all the heads of families, sick and well, 
of 11.2 per centX7.7iX7, or six days. An additional 3.7 per cent of 
heads of families idle for combinations of reasons in which sickness 
was one element would increase the average. 

For the country as a whole an estimate based upon German 
experience indicates that among the 33,500,000 occupied men and 
women there occur annually 13,400,000 cases of illness, causing 
284,750,000 days of disability, or an average of 8.5 days per person. 
Probably the most extensive actual study in this field was undertaken 
for the recent (1915) federal Commission on Industrial Relations. 
The investigation covered nearly 1,000,000 workers in representative 
establishments and occupations, and as a result it was tentatively 
stated that each of this country’s 30,000,000 workers loses annually 
an average of about nine days on account of illness alone. “Much 
attention is now given to accident prevention,” declares the com¬ 
mission, “yet accidents cause only one-seventh as much destitution as 
does sickness.” 

An excessive infant mortality rate is found among the industrial 
population. —Recent studies in this country show the truth for America 
of what has repeatedly been proved abroad, that there is an excessively 
high infant death rate among the wage-earning section of the popula¬ 
tion. In Johnstown, Pa., for example, it was found that in the ward 
where lived the poorest paid part of the community, those doing 
unskilled work in the mines and steel mills, the infant mortality rate 
was twice that of the city as a whole, and five times that of the most 
favorable sections. Throughout the city the mortality rate for all 
live babies under one year born in wedlock was 130.7 per 1,000. 
In families where the father earned $1,200 or more a year, or had 
“ample” income, the death rate was 84 per 1,000; when the father 
earned less than $521 a year or less than $10 a week, the death rate 
rose to 255.7 per 1,000. A similar study in Montclair, N.J., showed 
precisely the same tendency—a heightened infant mortality rate with 
a decrease in the family income. If it be true that “a high infant 
mortality implies a high prevalence of the conditions which determine 
national inferiority,” the infant death rate shown among American 
workers is indicative of conditions which stand sorely in need of 
correction. 


438 THE WORKER IN MODERN ECONOMIC SOCIETY 


The general death rate among wage-earners is high. —The experience 
of companies which do both an industrial life insurance business 
for small weekly payments among the lower paid workers and ordinary 
business among other classes also shows a high mortality among the 
working population. 

Better provision for medical care among wage-earners is necessary .— 
Most wage-earners and their families do not have proper medical 
attention, as judged by modern standards, and very many of them 
entirely lack the advice of physicians and the most elementary 
nursing—even in maternity cases. Many of them are unable to pay 
the fees for private physicians’ care; free hospital wards, dispensaries, 
and nursing service fail to meet the whole problem; and medical 
equipment is too scarce and too scattered for the universal provision 
of modern up-to-date treatment. 

More effective methods are needed for meeting the wage loss due to 
illness: —“The poor,” declares a mid-western social welfare organi¬ 
zation, impressed by ill health as a cause of poverty, “are those whom 
sickness has halted in their daily tasks.” Unless some means more 
effective than any yet in force in this country is devised for protecting 
the wage-earner against the consequent stoppage of income, illness 
must be expected to produce in the future as in the past its yearly 
harvest of destitution and demoralization. 

1. The wage loss due to illness amounts to millions of dollars 
annually. The investigators for the federal Commission on Industrial 
Relations calculated that the yearly wage loss to 30,000,000 workers 
throughout the country at $2 a day is $500,000,000. 1 

2. Savings of wage-earners are insufficient to meet this loss. 
Low wages, barely sufficient to supply the necessaries of daily life, 
are inadequate to meet the wage loss due to illness. Without taking 
into consideration the loss of working time for any cause, it has been 
found that just before the war in the principal industries of the 
United States between one-quarter and one-third of the male workers 
approximately eighteen years of age and over earned less than $10 
a week, from two-thirds to three-fourths earned less than $15 a week, 
and only about one-tenth earned more than $20 a week. 

1 Present calculations would necessarily be based on a higher wage base than 
$2.00 a day.— Editor’s Note. 


OCCUPATIONAL DISEASE AND SICKNESS 


439 


3. POSSIBLE SAVINGS FROM HEALTH SUPERVISION 1 


No. of 
Lives 

Expected mortality per 1,000 in population examined; conservative 
figures for average population at work. 10 

Probable number of substandard or physically impaired lives per 

1,000 in population examined. 300 

Expected mortality without examination per 300 substandard lives.. 6 

Probable mortality with examination per 300 substandard lives. 3 

Gain in mortality (lives per annum) in substandard group. 3 

Add at least one life saved in standard group. 1 

Economic value of average life. $5,000 


(Formula of Dublin and Whitney based on exact computation 
of basic factors, increment of wealth, etc. Value of 1 year of life 
$100X50 [average lifetime] $5,000, economic value of average life.) 

Mortality gain to state for each 1,000 examined (4 lives X 

$5,ooo) 2 . $ 20,000 

Assuming 2 people constantly ill for each death occurring 
in group, the saving of 4 lives means the elimination of 
8 cases of chronic illness from the group, or a reduction 
of 8X365, or 2,920 days of illness. At a medical, nursing 
and extra diet cost for illness of $3 per day, the saving 


equals about. 9,000 

Profit to state and community per 1,000 of population.$ 29,000 


Applying this factor to a population of 105,000,000 which 
would exclude the extremely aged and infirm who would 
not come under the operation of these formulae, we have 
the following exhibit: 105,000,000X$29 equals about. .. $3,045,000,000 

What would be the cost of applying a system of periodic 
examination to the entire population ? 

If there were thorough organization of such work the cost 


would not exceed $5 per individual—a total of. 525,000,000 

leaving an economic balance of. $2,520,000,000 


1 Adapted from Waste in Industry, pp. 354-56. (Published by Federated 
American Engineering Societies, Washington, D.C.) 

2 Adapted from Irving Fisher, Report on National Vitality, Its Wastes and 
Conservation, p. 34. (Government Printing Office, 1909.) 















440 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Assuming that one-third of the substandard cases revealed 
by these examinations or about 10,000,000 required 
medical, surgical or dental treatment at a cost of $100 
per case, the cost of this repair work would aggregate... $1,000,000,000 

leaving a net margin of economic gain of. $1,000,000,000 

also excess dividends in: Health; Happiness; Satisfac¬ 
tion in Living; Prevention of Pain; Prevention of 
Sorrow; Prevention of Discontentment; and Industrial 
Unrest. 

It should be remembered that these formulae are derived from 
actual experience in carefully studied groups and are not based upon 
mere estimates by authorities. They agree, however, in many 
particulars with the expert opinion grouped in the Report on National 
Vitality where a probable economic loss of $1,500,000,000 from 
preventable disease and death was estimated, based on the consensus 
of opinion of leading medical authorities. 

4. RESPONSIBILITY FOR DISEASE 

a) WORKING, LIVING, AND COMMUNITY CONDITIONS 1 

Conditions and behavior causing disease and death. —The amount 
of sickness and the number of deaths are affected by many conditions 
and by personal conduct or behavior. These conditions may be 
grouped under working conditions, living conditions and community 
conditions. 

Work with harmful substances, work under unsanitary or other 
harmful conditions, and perhaps fatigue give rise to an excessive 
amount of sickness and increase the number of premature deaths. 

Unsanitary conditions (dirt, dust, dampness), bad lighting, bad 
ventilation, excessive heat and cold in the place of work record their 
effects upon wage-earners. 

Fatigue, due to the accumulation of waste products within the 
system called fatigue poisons and fatigue toxins, is said by some to 
be one of the most common causes of occupational disability. It is 
claimed that it may cause “anemia, enlargement of the heart, increased 
blood pressure, circulatory diseases, kidney disease and neurasthenia 
or nervous exhaustion.” Fatigue may be caused by many things in 
industry—standing at work, strained positions, noise, monotony of 
work due to specialization, unusual concentration of attention, speed 

1 Taken from Report of the Health Commission of Illinois , 1919. 




OCCUPATIONAL DISEASE AND SICKNESS 


441 


induced by piece work or otherwise, long hours per day or the seven 
day week, alternate night and day work, etc. Of these speed on piece 
work and long hours are perhaps of most importance. 

Recognized and definitely established occupational diseases are 
traced directly to their cause. The occupational factor in other 
cases can be established only by records and statistical tabulation. 
It may be said, however, that mortality statistics show higher death 
rates among wage-earners than among the proprietary and professional 
classes. They show excesses of different (fatal) disease in different 
occupations—e.g., tuberculosis among clerks, bookkeepers and office 
employees; pneumonia among molders, coal-miners, and teamsters. 
They show, also, great differences in death rates by occupation. 
Of those gainfully occupied, about two-fifths of the entire population 
are directly affected by the working conditions described. All are 
affected by “living conditions.” 

It is a matter of common observation and common knowledge 
that the diet of most persons is not as good as their financial circum¬ 
stances permit. Though it has not been accurately measured, it is 
generally presumed that there is a close relation between housing 
conditions and disease. Bad plumbing, poor ventilation, dirt, 
insufficient light and overcrowding may undermine health and spread 
disease. Bad water, bad milk and impure food, dirty streets, poor 
sewage disposal, and poor control of contagious diseases are important 
causes of disease. Community neglect and high sickness and high 
death rates go hand in hand. 

There is a close relation between low family incomes and sickness 
and premature death. It has been said, “the fact is poverty is the 
greatest problem in public health.” This poverty may be due to 
the disruption of families by the death or desertion of the chief bread¬ 
winner, to old age or incapacity, to large families, to unemployment, 
or to low wages—as it very frequently is. But whatever its cause, 
in the absence of property to fall back on, it means inadequate food, 
poor housing, insufficient clothing, and poor medical care. It means 
continuing at work when rest and recuperation are needed. If due 
to lack of employment, this adds worry, nervous strain and perhaps 
irregular living. 

Finally, the factor of the individual’s behavior must be emphasized 
because the violation of the dictates of common sense in eating, 
drinking, sleeping, dress, recreation, sexual relations, and much else 
is of frequent occurrence and gives rise to excessive sickness and death 


442 


THE WORKER IN MODERN ECONOMIC SOCIETY 


rates. That this is true is a matter of common knowledge and 
requires no further comment. 

Responsibility for sickness and premature death. —The responsibility 
for sickness and premature death must in most cases be divided among 
the individual, the community and industry; the share of each is no 
small one. Occupational diseases can be charged to industry; typhoid 
and contagion may be charged to the community; perhaps the indi¬ 
vidual should be charged with responsibility for venereal disease. 
Most diseases, however, cannot be traced to a single definite source. 
The share of the cooperating factors cannot be measured by known 
methods of investigation. If it could be and low wages were found 
to be responsible for half the sickness, who could say that low wages 
are the fault of the employer, the wage-earner, or the community, or, 
for that matter, are to some extent unavoidable ? 

b ) GENERAL HEALTH AS INFLUENCING INDUSTRIAL FATIGUE 1 

Unfortunately in most discussions of industrial fatigue, a falling 
work curve or diminished output among employees who have reported 
ill is accepted as a complete, uncomplicated reflection of fatigue. 
This sweeping assumption is wholly unjustifiable. 

The workers themselves must be studied as to all the factors, 
apart from work, that have influenced their output. We have little 
hesitation in saying that the most important factors relate to the original 
fundamental condition of physical and mental health of the workers 
before the work tests were applied. Cumulative fatigue is stressed by 
most writers, but the obvious influence of impaired health, in determin¬ 
ing as cumulative fatigue what would otherwise be physiological and 
rhythmic, is ignored; that is, infection may so depress an individual 
as to prevent him from rallying from ordinary physiological fatigue, 
and thus carry him over into cumulative fatigue. 

Is the worker ill because he is tired , or tired because he is ill ?— 
Inasmuch as physical examinations have shown that more than 50 
per cent of any group of industrial workers are in need of medical 
attention, this enormous factor which has been practically ignored 
in fatigue studies is entitled to first instead of last place. Comparisons 
of the productivity of six-, eight-, and ten-hour plants do not give 
real testimony as to the optimal working day in any industry, unless 

1 Adapted with permission from Eugene Lyman Fisk, M.D. (Medical Director, 
Life Extension Institute, New York City), “Fatigue in Industry,” American Journal 
Public Health (March, 1922). 


OCCUPATIONAL DISEASE AND SICKNESS 


443 


we know how many in the group are affected by preventable or 
curable conditions, such as infected teeth, infected tonsils, constipation, 
faulty diet; and mental poison such as home worries, suppressed or 
thwarted emotions or aspirations, conditions which may, and probably 
do have far more influence on working capacity than mechanical 
environmental influence—even hard work and long hours, unless 
carried to irrational extreme. 

5. CARRIERS FOR INSURING AGAINST WAGE 
LOSS CAUSED BY SICKNESS 1 

A number of methods for providing insurance against illness— 
such as establishment funds, commercial health insurance, fraternal 
insurance, and trade union benefit funds—have been tried in this 
country, with uniformly unsatisfactory results as far as the mass of 
wage-earners is concerned. 

(1) The term “establishment fund” is commonly used in the 
United States to denote a benefit fund limited to the employees of a 
single industrial establishment or organization. As with other 
voluntary forms of health insurance in this country, the exact develop¬ 
ment which these funds have reached to-day is not precisely known. 
But that they are the exception rather than the rule among even 
important manufacturing plants such as are members of the National 
Association of Manufacturers is shown by the response to a recent 
questionnaire sent out by that organization. Out of 564 manu¬ 
facturers sufficiently interested in sickness insurance to reply, only 144. 
or 25 per cent, had mutual benefit funds or other provision for sickness. 
A similar inquiry by a manufacturer in 1913 brought out like results. 
Out of 500 prominent manufacturing establishments addressed, about 
200 did not reply at all and only no of the remainder had such funds. 
They are most common among railroad and mining employees, 
because of the hazardous nature of both occupations and the isolation 
of many mining communities, which renders combined action impera¬ 
tive if any medical care is to be secured. 

(2) The opportunity for workers to insure themselves against 
sickness by commercial health insurance on the industrial plan which 
is now available has yielded no better results. All available evidence 
goes to show that industrial health insurance is limited in extent and 
is developed very slowly. In New York in 1914 four insurance 

1 Taken with permission from American Labor Legislation Review, Vol. VI. 
(Published by American Association for Labor Legislation, 1916.) 


444 


THE WORKER IN MODERN ECONOMIC SOCIETY 


companies received $29,223,400.11 premiums for industrial life insur¬ 
ance, whereas the total premiums paid commercial companies for all 
forms of health insurance in the same state and year were only for 
$1,379,915. The larger part of even this comparatively small sum 
undoubtedly came from the business and professional, not from the 
wage-earning classes, since the more common forms of this insurance 
have relatively high premiums, payable annually or quarterly, which 
are entirely unsuited to the needs of wage-workers. In 19 n an 
authoritative estimate of the relative extent of industrial health 
insurance, which is based on small weekly or monthly premiums, 
placed it at not more than 20 per cent of the total. 

Moreover there are indications that even the limited membership 
of industrial health insurance enterprises is not held permanently, 
but that the lapse rate is very high. Among the mutual sick benefit 
associations just mentioned the number of certificates issued in any 
one year is almost as large as the number in force at the end of that 
year. Although similar figures for the other sorts of commercial 
health insurance are not at hand, there is every reason to believe that 
the high lapse rate found in industrial life insurance is repeated in 
industrial health insurance. 

[Note: This article was written in 1916. It is probable that the 
number of establishment funds has increased considerably since that 
time.— Ed.] 

(3) A large amount of insurance is provided by so-called fraternal 
societies which combine, with certain social features and a semi¬ 
secret ritual, insurance on the mutual plan, generally by means of 
assessments. However, only a small fraction of this insurance covers 
sickness or temporary disability. On January 1, 1915, there were in 
the United States 179 fraternal associations with 7,700,000 “benefit 
members.” During 1914 the benefits of all kinds, including death, 
sickness, and old age, paid by these societies, totaled about $97,000,000. 
Only thirty national organizations, having some 820,000 members, 
not all of whom carried health insurance, paid benefits for sickness in 
1914 and this minority disbursed but $1,100,000, about 1 per cent of 
the whole fraternal insurance business for both sickness and accident 
claims. Over half of this amount was paid out by three societies. 
It is true that many individual lodges of some large fraternal orders 
also pay benefits for sickness, but unfortunately no figures on the 
amount of these benefits or the members thus protected are available. 


OCCUPATIONAL DISEASE AND SICKNESS 


445 


(4) The fourth method of voluntary health insurance which has 
developed in America, namely, trade union benefit funds, is also very 
limited in extent. Of approximately 30,000,000 wage-earners in the 
country, not more than one-tenth are members of labor unions of 
any sort. Moreover, not all members of trade unions are covered by 
union sick benefit funds. During the year 1914-15 twenty-nine 
international unions affiliated with the American Federation of Labor 
paid out $971,271.75 in sick benefits, but the membership of these 
internationals comprises about 548,000, or not much more than a 
quarter of the entire membership of the federation. Similar relief 
was paid by some of the local unions in other trades. 

In view of these facts, it is obvious that the great majority of 
American industrial workers are to-day unprotected by health insur¬ 
ance. Moreover, the lowest paid workers who most need insurance 
are least likely to be protected. 

6. ORGANIZATION OF MEDICAL AID UNDER 
HEALTH INSURANCE 1 

Corps of full-time medical officers. —In view of the experience in 
both Europe and America, it would seem best to place the administra¬ 
tion of the medical benefits directly under governmental agencies 
and to insert a provision that no cash benefits be paid , except on the 
certificate of medical officers of the national and state health departments 
acting as medical referees under the regulations of the central governing 
board or commission. Such medical officers should be selected accord¬ 
ing to civil-service methods. Since these officers are the represent¬ 
atives of the health departments in the funds, their selection and 
appointment should also be based upon their knowledge of preventive 
as well as of clinical medicine. After a probationary period of service 
satisfactory to the health administration, they should be given 
permanent appointments, subject to removal only for inefficiency or 
immoral conduct. One of their duties should be to examine each 
disabled beneficiary and keep themselves informed as to the progress 
of his recovery. It is needless to say that the referees should not be 
permitted to engage in private practice. 

Free choice of registered physicians. —With such a check on the 
payment of cash benefits, the medical and surgical treatment provided 

1 Adapted from Woodward and Warren, Public Health Reports , Reprint No. 352, 
July, 1916, pp. 6-7. 


446 


THE WORKER IN MODERN ECONOMIC SOCIETY 


for beneficiaries could safely be left to the physician of the patient’s 
choice, and payment made on a capitation basis regardless of whether 
the patient was sick or well, after the manner of the English national 
insurance act. This method of selection and payment of physicians 
for the medical and surgical relief would offer every incentive to them 
to keep their patients well and to endeavor to please by rendering their 
most efficient service. 

Health insurance a measure for prevention of disease. —It would be 
through the corps of full-time medical officers of the health department 
acting as referees, that the health insurance system would be linked 
up with other health agencies. It is not necessary to relate here the 
advantages which would arise from the visits of such specially trained 
men into the homes of all sick persons. Nor is it necessary to tell 
how these officers acting as health officers could further lower the 
sick rate. The objection could not be raised that such a corps would 
be too expensive. It would not require more than one such medical 
officer to every 4,000 insured persons and at that rate they could 
more than save their salaries by relieving insurance funds from 
paying unjust claims. Furthermore, while an estimate cannot be 
made of the amount to be saved by their efforts in the way of lowering 
the sick rate, it is safe to say that it would amount to many times 
more than the sum of their salaries. 

To enact a health insurance law simply as a relief measure without 
adequate preventive features would be a serious mistake. 

7. ARGUMENTS AGAINST HEALTH INSURANCE 

a) DANGEROUS IN PRINCIPLE 1 

a) The danger of taking some people's money without their consent 
and giving it to other people.- —In the Standard Bill it is proposed to 
deprive responsible adults in part of the right to use their own money 
as they may choose for satisfying their own needs and those of their 
families, and instead to turn such portion of that money as the state 
deems applicable to sickness over to a political association to be used 
or distributed as a majority of that association or of the State Com¬ 
mission may choose. If the percentage of incomes so deemed applica¬ 
ble to that one need may rightly be so disposed of, the same thing may 
rightly be done also with the percentages of incomes so deemed 
applicable to providing for the risks of invalidity, old age, premature 

1 Taken with permission from P. T. Sherman, Criticism of the “Standard Bill ” 
(1917), pp. 14-16, 20. 


OCCUPATIONAL DISEASE AND SICKNESS 


447 


death, and unemployment. But if all that be proper, why would it 
not be just as proper to take the proportion of individual incomes 
deemed by the Government to be applicable for food, clothing, 
housing, etc. ? And if one-fifth of the cost of insuring some people, 
not all of whom are in need, may be taken from other people, why 
not two-fifths or three-fifths ? We should not be off our guard in 
this matter. The movement in America for compulsory insurance 
obtains much of its support from those who seek it as a means of 
transferring wealth, with complete collectivism as the end. 

b) The danger of weakening individual initiative and family responsi¬ 
bility .—Clearly, if the state is to see to it that every person in want 
is to be well provided for, individuals will have no more need to exert 
or deny themselves for the purpose of making provision for themselves 
and their families. This is the most vital objection. All schemes of 
this kind which tend to confuse the self-sufficient working people with 
the submerged and “down-and-outs” are apt to harm the former 
class both in their pocketbooks and in their morale. 

c) The economic danger from malingerers. —It is an objection to 
voluntary insurance that it is apt to exclude the bad risks in the 
community, physical as well as moral. On the other hand, there is 
a very grave danger from general compulsory insurance in that it 
errs in the opposite direction, and, besides including the bad physical 
risks, brings in the bad moral risks from whom malingering and 
impositions are to be expected. Would not a comprehensive system 
insuring high rates of benefits to the parasitic classes result in a reduc¬ 
tion in the aggregate social insurance of the community, through 
the exhaustion of capital, the discouragement of savings and a ruinous 
increase of the burden on the better classes of the insured ? 

d) The medical danger. —Compulsory sickness insurance tends to 
bring the practice of medicine into politics; and the effects on its 
quality certainly are not good. 

b) DOES NOT REDUCE SICKNESS 1 

i. Compulsory health insurance will not materially reduce the 
amount of sickness: —As a matter of fact no analogy can properly be 
drawn between workmen’s compensation for accidents and compulsory 
health insurance. Workmen’s compensation is a charge on industry 
for injuries incurred in the course of employment; compulsory 

1 Taken with permission from National Industrial Conference Board- Is 
Compulsory Health Insurance Desirable? (October, 1919). 


448 


THE WORKER IN MODERN ECONOMIC SOCIETY 


health insurance is designed to care for ills of all kinds, no matter how 
contracted. In the case of industrial accidents, the connection 
between the injury and the work can usually be established, and the 
employer, through safeguarding machinery and other means, can in 
some measure prevent accidents. In the case of health hazards, on 
the other hand, it is next to impossible, except in the case of purely 
occupational or purely personal diseases, to establish responsibility. 
It is thus obviously out of the question for a system of penalties and 
rewards to provide a satisfactory constructive force to bring about a 
reduction of sickness. 

This fact is well illustrated by recent experience with compulsory 
health insurance in Great Britain. The provisions of the British law 
embodying the prevention theory have never been enforced. It was 
found impossible to assess at a higher premium rate employers who 
allowed improper working conditions, or communities where landlords 
failed to provide proper housing, or where water companies supplied 
impure water. No great Health First campaign was started in Great 
Britain as a result of compulsory health insurance. 

Again, the Illinois commission which investigated compulsory health 
insurance and reported against it in 1919, stated: “There is no evidence 
that compulsory insurance has resulted in an improvement in health. 
The death rates and morbidity statistics of the countries which do 
not have compulsory health insurance show a decline fully equal to 
that of the countries which have such systems. The explanation is 
probably found in the fact that compensation for wage losses caused 
by sickness has a very minor effect upon health, that because of the 
freedom of choice of physician for treatment (which freedom exists 
even under the compulsory system) the quality of medical service is 
not improved, that the advance in medical science, public health 
control, educational movements for better personal hygiene, and the 
many factors which have entered into the prevention of disease, 
have operated with equal, if not greater vigor in those countries 
which do not have compulsory health insurance. It seems clear that 
compulsory health insurance is not an important factor in the preven¬ 
tion of disease or in the conservation of health.” 

Compulsory health insurance as proposed in this country fails to 
provide help where it is most needed, since it will confer no benefits 
on the unemployed, casual workers or small-scale self-employers 
whose health is probably the poorest of any social groups. 

2. Existing agencies can be developed to meet the situation, with 
better results .—Available evidence affords ample proof that in spite of 


OCCUPATIONAL DISEASE AND SICKNESS 


449 


an amazing indifference on the part of the public, agencies already in 
existence have brought about a steady reduction in the general death 
rate and particularly in the death rate of children, and have cut down 
enormously tuberculosis, typhoid fever and other communicable 
diseases. The principal responsibility for failure to go ahead more 
rapidly rests, not with them, but with a public which does not 
appreciate the value of what they are attempting to do by providing 
adequate appropriations. 

Compulsory health insurance as thus far proposed would not bring 
increased appropriations to existing agencies for health betterment, 
but instead, would create a new and expensive machinery for doing 
much of the work which that already organized could readily undertake 
at a smaller cost if given the necessary funds. 

8. HEALTH INSURANCE AS A PREVENTIVE 

MEASURE 1 

The campaign against tuberculosis has given to the American 
people a new idea of the doctor. We had thought of him as a last 
resort after we had doctored ourselves and tried out the patent 
medicines and practiced faith. The anti-tuberculosis movement has 
begun to show us that the doctor should be first. We know that we 
need him in sickness. We begin to want him also to prevent sickness. 
Likewise, the workingmen’s accident-compensation laws have given 
us a new idea regarding insurance. We thought that accidents were 
inevitable, and that the purpose of accident insurance was the philan¬ 
thropic purpose of relief to injured workmen. But the compensation 
laws have shown us that accidents are largely preventable. So those 
persons who formerly practiced the profession of claim agent for the 
purpose of protecting their employers against lawsuits have become 
safety experts, and they now protect their employers against the tax 
on accidents by preventing the accident. 

I sometimes think it is more difficult to persuade the average 
doctor to become a health expert and to prevent sickness than it was 
to convert the claim agent into a safety expert to prevent accidents. 
As a matter of fact, the claim agent fought the process of conversion 
about as stiffly as he could, and it was only the overwhelming power 
of a tax on accidents that converted him. Now he is proud of his new 
profession, and his employer is proud of him. 

1 Adapted with permission from John R. Commons, Health Program. (Address 
delivered at Fifteenth Annual Meeting, National Tuberculosis Association, June, 
1919.) 


45° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


It is much the same with the proposed business tax on sickness. 
We read of the probable enormous cost to industry of compulsory 
health insurance. It looks like bankruptcy. I am willing to accept 
the figures. They are presumably based on the existing amount of 
sickness, although the same insurance experts turn around and say 
there is not much sickness anyhow. 

The explanation is rather simple. They fail to distinguish 
philanthropy from business. If this large amount of sickness is 
unpr even table, then the cost of relief to the sick in a proper humanita¬ 
rian way will doubtless be very great. But if it is largely preventable, 
then the proper American way is to offer to our business men a chance 
to make a big profit by preventing it. 

The main purpose is the business purpose of making sickness 
prevention profitable. There does not seem to be any other way of 
reaching all of our business men as well as workingmen. It is too 
easy to shift the entire cost of sickness over to the workingman and 
his family. The thing works automatically. When the workman 
gets sick he just lays off on his own initiative and pays his own bills 
if he can, and somebody else takes his place. 

But health insurance is a follow-up proposition. The employer 
cannot shift the entire cost over to the workmen, but must share the 
cost of doctors and nurses and hospitals and medicines and must 
continue to pay a part of the worker’s wages even when absent from 
work. It is a sickness tax on industry, coupled with an insurance 
scheme in order to spread the tax over the industry and over a period 
of time. But since the industry is not solely responsible for sickness, 
the workman also is required to contribute to the insurance fund, 
and a part of the tax is thereby spread out over his wages. 

If it were not that several large corporations have already volunta¬ 
rily adopted this plan of health insurance and set the example, we 
could not know certainly how it would work. But we do know, from 
their example, that it prevents sickness. I know such a corpora¬ 
tion that has reduced the number of days lost on account of sickness 
one-half, and the resultant increase in wages and the increase in 
efficiency of workers has been much greater than the total cost of the 
insurance. 

Here is the big inducement for a public-health program. Not 
many corporations are big enough, not farseeing enough, to tax them¬ 
selves voluntarily, as these have done, for the support of hospitals and 
sanatoria, clinics, doctors, and nurses. The overwhelming majority 


OCCUPATIONAL DISEASE AND SICKNESS 


451 


of business men must depend on the public-health authorities for this 
assistance. And they will not seriously look for this assistance until 
they are taxed by law for the sickness that they have not prevented. 

9. COMPULSORY HEALTH INSURANCE 1 

Sickness is a problem calling for the application of the insurance 
principle. —Insurance is cooperative provision against individual 
losses. Sickness is a risk to which every individual is exposed. 
Insurance is a means of distributing losses. The losses due to sickness 
if distributed over the entire wage-earning group and paid in weekly 
semi-monthly or monthly installments, would not fall heavily 
upon any one individual or family. Sickness costs frequently cause 
substantial deficits, lowered standards of living and other unfavorable 
results. The incidence of sickness in any considerable group is so 
constant as to make the risk insurable on a sound actuarial basis. 

Much of the health insurance carried by wage-earners is inadequate 
and costly. —Information obtained by the Commission’s investigators 
leads to the following conclusions relative to the disability benefits 
received from the various sickness insurance carriers: 

a) That though 20.9 per cent of 4,474 wage-earners lost wages 
for a week or more during the year, only 13.4 per cent of these received 
benefits partially indemnifying them for such loss. 

b) That the average loss was $118.76 and that the average benefit 
received was $52.44 or but 44.1 per cent of the insured wage-earners’ 
loss. 

c ) That taking the group as a whole, the disability insurance 
received was only about 6 per cent of the wage loss caused by 
disabling sickness of a week or more in duration. 

d) That not only was there most sickness and a greater average 
wage loss in the lowest income group but that the average benefit 
was lowest in the same group, being 15.5 per cent of the wages lost as 
compared with 43.1 per cent and 47.4 per cent respectively in the two 
higher income groups. Health insurance provided by casualty 
companies is very expensive as shown by the fact that less than half 
of the money paid in as premiums is paid out in cash benefits to the 
sick. 

If the application of the insurance principle to the problem of sickness 
among wage-earners and their dependents is to be most effective it must 

1 Taken from Report of the Minority of the Health Insurance Commission of 
Illinois , 1919. 


452 


THE WORKER IN MODERN ECONOMIC SOCIETY 


be universal .—All experience shows that if such insurance is to be 
extended to more than a mere fraction of the wage-earners, it must be 
compulsory. 

We believe that the above analysis of the facts disclosed by the 
investigations made for the Commission is the only logical interpreta¬ 
tion of these facts and would have justified the Commission in recom¬ 
mending the immediate adoption of compulsory health insurance of 
Illinois. In our opinion cash benefits partially indemnifying the loss 
of wages and the provision of medical care for wage-earners and their 
dependents would be of great value. We see no reason why the 
organization of medical practice under compulsory health insurance 
could not be so effected as to promote the interests of the insured, 
the medical profession and the community as a whole. When health 
insurance is made compulsory all experience shows that most of it 
will be carried by such organizations as those in which a minority 
are now insured and which will become standardized in order to 
qualify as carriers. It would perhaps be necessary to establish local 
mutual organizations for those who could not or would not join 
existing organizations, but what basis is there for assuming that 
these would be politically controlled ? In view of the fact that the 
officials of these organizations would be elected by those who con¬ 
tribute to the funds, it seems to us that the assumption contained 
in the majority report that they would be so controlled is gratuitous. 

With reference to the point made in the majority report that 
compulsory health insurance has not been an important factor in 
the prevention of sickness, we would not claim that compulsory 
health insurance is intended as a preventive medical measure. Like 
many other forms of insurance it is not intended to eradicate the risk 
against which it offers protection. We would call attention, however, 
to the fact that the British Medical Society has expressed the opinion 
that the medical care of English wage-earners has been materially 
improved under compulsory health insurance. 

io. HEALTH INSURANCE IN GREAT BRITAIN 1 

The National Insurance Act became a law on December 16, 1911, 
and went into operation July 15, 1912. The Act was amended in 
1913 and again in 1918; and four special amendments affecting the 
men in the army and navy were passed between 1914 and 1917. 

1 Taken from Edith Abbott, Illinois Health Insurance Commission Report , 1919, 
pp. 600-622. 


OCCUPATIONAL DISEASE AND SICKNESS 


453 


Scope of the Act. —Health Insurance is compulsory upon all persons 
in Great Britain and Ireland from sixteen to seventy years of age 
who are employed at manual labor and upon all other employed 
persons whose rate of remuneration is not in excess of £160 ($778.64) 
per annum. There are a few exceptions, but the Act is wide in its 
scope. Home-workers are included under it, and even such irregu¬ 
larly employed workers as dock-laborers and golf-caddies. On the 
other hand, all persons working on their own account, such as small 
shop-keepers and peddlers, who form a large class, are not brought 
under the Act except as voluntary contributors. 

In England approximately 57 per cent of the adult male popula¬ 
tion is insured and 22 per cent of the adult female population is 
insured. 

The insurance fund. —The British Insurance Act is a contribu¬ 
tory scheme. The fund from which benefits are paid is derived from 
point contributions of the employers, the insured wage-earners, and 
the state. The contributions are divided as follows: In the case of 
the men, the state contributes two-ninths, the employers three-ninths, 
and the men themselves four-ninths. In the case of the women, the 
state contributes one-fourth of the sum, and the remainder is divided 
evenly between the working woman and her employer. The actual 
contributions per week are as follows: 4 d. (8 cents) from the employed 
man and 3d. (6 cents) from the employed woman; the employer 
contributes 3d. (6 cents) in either case; and the state 2d. (4 cents) in 
either case. 

The British insurance system non-contributory for persons earning 
low wages. —From the beginning it was planned to make special 
provision for those receiving very low wages. The difference was to 
be paid not by the state but by the employer. In the words of Mr. 
Lloyd George, “If you make the state pay the difference, then it 
means that the employers who pay high wages to their workmen will 
be taxed for the purpose of making up the diminished charge for 
workmen of other employers who are paying less. We have come 
to the conclusion that the difference ought to be made up by the 
employer who profits by cheap labour.” As a matter of fact, it was 
finally provided that for those in the very lowest wage class, insurance 
was to be non-contributory and contributions were to be reduced in 
other classes. 

Machinery for collecting contributions. —The contributions of 
employers and workmen are collected by means of special insurance 


454 


THE WORKER IN MODERN ECONOMIC SOCIETY 


stamps, which can be purchased at the post-office. Every employed 
person, man or woman, is given a card; and at the end of the week 
the employer puts on the man’s card a 7 d. stamp representing the 4 d. 
which he deducts from the man’s wages and his own contribution of 
3d. The post-master general turns over the sums collected by the 
sale of insurance stamps to the Central Health Insurance Authority— 
the insurance commissioners. 

At the end of each quarter, members of approved societies send 
their cards to their societies. Each society prepares a quarterly 
return for the commission showing the number and value of the 
contributions on the cards for which the society claims credit. The 
societies are required promptly to furnish members with new cards, 
and the stamped cards, surrendered to the societies, are finally 
forwarded to the commission. 

Benefits .—The benefits conferred on insured contributors are as 
follows: (1) “Medical benefit”: medical treatment and attendance 
including drugs and appliances; (2) “Sanatorium benefit”: care and 
treatment when suffering from tuberculosis or other diseases for 
which sanatorium care may be needed; (3) “Sickness benefit,” the 
payment of a weekly cash allowance to insured persons when “ren¬ 
dered incapable of work by some specific disease or by bodily or 
mental disablement.” The ordinary benefits payable in case of 
incapacity for work are 10s. ($2.43) a week for men and js. 6 d. ($1.83) 
a week for women. Payments begin on the fourth day after such 
incapacity and may continue for a period of twenty-six weeks; (4) 
“Disablement benefit”: a cash payment of 55. ($1.22) a week for 
men and women alike, which begins after the twenty-six weeks of 
sickness benefit have expired and may continue up to the age of 
seventy years, when old-age pensions are payable; (5) “Maternity 
benefits”: a cash payment of 30 s. ($7.50) in case of the confinement 
of the wife of an insured person or of any woman who is herself an 
insured person. 

Medical and sanatorium benefits become available immediately, 
but full benefits are withheld until a specified number of payments 
has been made as follows: Sickness benefit is payable after contrib¬ 
utors have been insured for 26 weeks and have paid 26 contributions. 
Maternity benefit, originally deferred for the same period of time, 
is, by the amending Act of 1918, payable only to contributors who 
have been insured for 42 weeks and have paid 42 contributions. 
Disablement benefit is payable only after 104 weeks of insurance and 
the payment of 104 weekly contributions. 


OCCUPATIONAL DISEASE AND SICKNESS 


455 


Medical and sanatorium benefits are administered by the insur¬ 
ance committees. Sickness, maternity, and disablement benefits are 
administered through so-called “ Approved Societies. ” For such 
benefits Mr. Lloyd George said he believed the old Friendly Societies 
of Great Britain had “ a great tradition behind them and an accumula¬ 
tion of experience which is very valuable when you come to deal 
with questions like malingering.” However, not only Friendly 
Societies but trade unions, industrial insurance companies, and 
employers’ provident funds may become “Approved Societies.” 

Arrears. —The English act is liberal in the matter of arrears, for 
no contributions are required during periods of reported incapacity 
for work, and benefits are gradually reduced instead of being totally 
withdrawn when arrears accumulate. 

Administration: insurance commissions and committees. —Four 
different health insurance commissions were created for the purposes 
of separate administration in England, Wales, Scotland, and Ireland; 
but a joint committee exists for the regulation of certain common 
problems. Local administration is intrusted to local insurance com¬ 
mittees, which are organized in each county and county borough, and 
to the health committees of county and borough councils. 

Local insurance committees have the following duties: (i) admin¬ 
istration of medical benefit for all insured persons; (2) administration 
of sanatorium benefit for all insured persons and their dependents; 
(3) administration of sickness, disablement, and maternity benefits 
for deposit contributors; (4) furnishing reports to the National 
Insurance Commissioners; (5) responsibility for dealing with the 
causes of “excessive sickness” in any locality. 

Insurance is carried by approved societies. —Insurance is carried 
through “Approved Societies,” and any society may be “approved” 
by the insurance commissioners if it satisfies certain conditions, the 
most important of which are (1) that it must not be a society carried 
on for profit; and (2) that its affairs must be “subject to the absolute 
control of its members.” All contributions are paid into the treasury, 
which in turn credits to each society the contributions paid in respect 
to the members of that society. 

Deposit contributors. —Insured persons who are refused admission 
to any society and insured persons who refuse to join a society become 
“deposit contributors.” Their contributions and their employers’ 
contributions are credited to a special fund to be called the post-office 
fund; and their insurance is said to be carried by the post-office, 
although as a matter of fact they can hardly be said to be “insured” 


456 THE WORKER IN MODERN ECONOMIC SOCIETY 


at all, since they receive in sickness, disablement, or maternity benefit 
only the sums standing to their credit in the post-office fund. They 
do, however, receive medical benefit and sanatorium benefit. 

British doctors and the Health Insurance Act. —During the two 
years from 1909 to 1911, when a health insurance bill was known to be 
in preparation, the British Medical Association had been preparing for 
a vigorous defense of the interests of the medical profession. In 
certain areas the doctors went on a strike. Yet doctors steadily 
joined the panels; and by January, 1913, there were nearly 14,000 
doctors on the panels, and there were very few districts where panels 
could not be formed. 

The panel system at work. —Every insurance committee is required 
to prepare and to publish a list of doctors who have agreed to attend 
and treat insured persons. Every “duly qualified medical practi¬ 
tioner” has a right to be included in the panel; and every insured 
person is given a free choice of doctors subject to the consent of the 
doctor selected. According to the statute, medical benefit is defined 
as “medical treatment and attendance, including the provision of 
proper and sufficient medicine, and such medical and surgical appli- 
. ances as may be prescribed by the insurance commissioners.” 

The statute provides, however, that “medical benefit shall not 
include any right to medical treatment or attendance in respect of 
a confinement.” The regulations of the insurance commissioners 
have put still further limitations upon the scope of medical benefit. 
Operations requiring surgical skill are not required of panel practi¬ 
tioners, and X-ray diagnosis and pathological and bacteriological 
investigations are also excluded. Dentistry is left over as an 
additional service to be provided in the future, and the treatment 
of the eyes and ears is held to be specialist service not required of 
the panel practitioners. 

Over-insurance. —The National Insurance Act carries a provision 
against double insurance. No person can become an insured person 
under the Act, ie., with contributions from employer and from the 
state added to his own, in more than one society; but he may, of 
course, be a member of several socieities independent of the Act. 
It appears to be not uncommon for a man to carry insurance through 
the “state side” of one society and additional insurance through the 
private of voluntary side of that or another society. In the old 
Friendly Societies the great majority of the members (in general 
about 90 per cent or more) continued their full contribution and were 


OCCUPATIONAL DISEASE AND SICKNESS 


457 


insured both on the “state side” and the “voluntary side.” As a 
result, insurance for a sum in excess of the normal wage of the person 
insured is now by no means uncommon. An insured person may 
therefore draw a larger income when he is “on sick benefit” than he 
earns when at work. 

The machinery for establishing sickness benefit claims. —In consider¬ 
ing the possibility of defective administrative machinery as an 
explanation of excessive sickness claims, it should be pointed out 
that, although the Approved Societies are obliged to pay claims for 
sickness benefit as prescribed in the Health Insurance Act, different 
societies may adopt different methods for making or proving such 
claims. Opportunities for differences in policy are especially likely 
to arise as regards such points as the definition of the term “ inability 
to work”; the questioning of doctors’certificates of incapacity; the 
system of visiting the sick in their homes during the period when 
benefits are being paid; or the discipline imposed on members receiv¬ 
ing benefits. 

The meaning of the term “ incapacity for work ” is all-important in 
the allocation of benefits. Sickness benefit in the statute is defined as 
“periodical payments whilst rendered incapable of work by some 
specific disease or by bodily or mental disablement.” This has not 
been interpreted literally as complete incapacity but merely an 
incapacity rendering members “unable to follow their ordinary 
employment.” The practice of the societies is to accept medical 
certificates of incapacity given by panel doctors as the proof of a 
claim for sickness benefit. 

« 

The breakdown of democratic control. —In the opinion of some 
working-class representatives the theory of democratic control upon 
which the administration of the Act by large numbers of independent 
Approved Societies was based has broken down. This plan was 
originally adopted in order to meet the wishes of the working classes, 
but their opinion seems to be that it has not been wholly successful. 

In practice the ideals of democratic government and absolute 
control by members of their own affairs have frequently been non¬ 
existent. In the large industrial insurance companies which hastily 
secured the membership of more than a third of all insured persons, 
the members cannot be said to have any effective control over the 
organization; and in the old Friendly Societies the old forms of local 
self-government seem to have been giving place more and more to 
centralized systems of control. Radical changes in administration 


458 THE WORKER IN MODERN ECONOMIC SOCIETY 


may yet prove to be necessary. Working-class leaders fear on the 
one hand the disorganizing effects of the Act upon the workingmen’s 
societies and resent on the other hand the undemocratic methods of 
the tommercial insurance companies. 

The administration of sanatorium benefit. —Sanatorium benefit is 
largely a tuberculosis benefit, and on the administrative side, it is a 
question of co-operation with the local authorities in providing the 
necessary dispensaries and sanatoria. 

Criticisms of the inadequacy of provision for tuberculosis appear 
to be very general in spite of the progress that has been made. 
Indeed, in view of the magnitude of the problem, it could not be 
expected to be otherwise. 

The administration of maternity benefit. —This benefit has been 
perhaps the most popular feature of the Insurance Act and the one 
that has presented the fewest problems from the administrative 
standpoint. The Act originally provided for the payment of a lump 
sum of 30s. ($7.30) in case of the confinement of the wife of an insured 
person or a woman who was herself an insured person whether she 
was married or not. An insured woman was under the original Act 
also entitled to sickness benefit or disablement benefit after her con¬ 
finement. An Amending Act in 1913 made the maternity benefit 
in every case the “mother’s benefit” payable only to the woman 
herself or to the husband on her order. 

PROBLEMS 

1. “Occupational diseases should be treated as accidents. They both arise 
out of the nature of work done by the employee.” Do you agree ? 

2. How do you account for the fact that in practice many occupational 
diseases are now compensated under the heading of accidents ? 

3. “Sickness is an even more serious problem than accidents or occupa¬ 
tional disease.” What might lead one to accept such a conclusion ? 

4. Trace the possible effects of the sickness of the worker upon ( a ) the 
worker, (b) the employer, (c) society. 

5. “Why can’t men take out health insurance to protect themselves if they 
need it ? Why do we need more laws ?” Why, indeed ? 

6. “Men get sick because they are careless.” “Men get sick because they 
are ignorant.” “Men get sick because their work is unhealthy.” 
With which statement do you agree ? 

7. “Sickness is always a result of a series of happenings and no one can 
say that a man becomes ill because of a particular job he is doing.” 
Comment. 


OCCUPATIONAL DISEASE AND SICKNESS 


459 


8 . “Laws are sometimes needed to protect us from our own ignorance.” 
How is this illustrated by health insurance ? 

9. A certain manufacturers association has issued a bulletin entitled 
“Sickness Insurance or Sickness Prevention?” What do you think of 
the title ? 

10. “Sickness Insurance is the next great forward step in the conservation 
of human vitality.” Explain. 

11. Should the employer contribute to health insurance? Why? Should 
the employee contribute ? Why ? Should the state contribute ? Why ? 

12. What is group insurance ? What are its advantages ? Is it preferable 
to state health insurance ? 

13. What would be the organization of the medical profession under health 
insurance ? What is meant by socialized medicine ? Did we have 
socialized medicine in the army ? Do we have it in peace-time ? What 
would be its advantages ? Would it have disadvantages ? If so, what 
would they be ? 

14. If you were a doctor would you favor health insurance ? Why ? 

15. Mr. Gompers recently declared that he was unalterably opposed to 
health insurance. How do you explain his action ? 

16. “If workmen’s compensation leads to malingering, still more will health 
insurance.” Comment. 

17. “Health Insurance would increase the cost of production and would be 
the last straw on the back of the patient camel of business.” “Health 
Insurance would result in a greatly increased price to the consumer.” 
Can both of these statements be true ? Which is correct ? Why ? 

18. “Health Insurance would increase the tyranny of the state.” 
Comment. 

19. The following questions have been raised as to the status of the physician 

under health insurance: (a) How are the doctors to do the work chosen ? 
Are all doctors in the community to work, or only a portion ? If only 
a portion, which ones ? ( b ) How are they to be paid ? By the year, 

by the patient, or by the job, and how much? Is there a prospect 
that this amount of pay will measure up somewhat to the present rate 
at which doctors are paid for similar work, or is it a scheme to cheapen 
the service of the physician ? (c) How does the patient choose his 

doctor? Is he allowed to have any choice in the matter? Is the 
present family doctor to go out of existence, or is he not ? ( d ) How is 

the question of specialty to be handled ? When a man is to be operated 
on, is he to take the cheap man or the best, and if the latter, who pays 
the surgeon, and how? How are the specialists chosen? ( e ) How 
about the man who wants an osteopath, a chiropractor, or a Christian 
Scientist? Is he to have his will, and who pays the bill, and how? 
Discuss. 


1 


CHAPTER XVI 
OLD AGE 

i. PREVALENCE OF OLD AGE POVERTY 1 

Number and extent .—The number of almshouse inmates 65 years 
of age and over on September 1, 1909, namely, 2,474, represents 
approximately 25 per cent of the total almshouse population in this 
state. The corresponding proportion for the United States as a whole 


TABLE LXXIII 
Aged Population By Classes 



65 and Over 

70 and Over 

1. In correctional institutions. 

556 

1,961 

3,480 

2,598 

3,075 

2,312 

10,888 

4,767 

27,230 

135 , 788 * 

179 
1,148 
2,204 „ 
1,960 
2,082 
1,550 

6,164 
2,699 
i 5 , 4 i 7 

80,460 

2. In insane asylums and hospitals. 

3. In almshouses. 

4. In benevolent homes. 

5. Recipients of public outdoor relief. 

6. Recipients of private outdoor relief. 

7. (a) Recipients of State and military aid. 

( b ) Recipients of soldiers’ relief. 

( c ) United States pensioners. 

8. Non-dependent aged (including all not classed in pre¬ 
ceding seven groups). 

Total. 

177,000 

105,000 



* These numbers are obtained by subtracting the corresponding totals of the first seven classes, 
exclusive of the recipients of state and military aid and soldiers’ relief, from the total number of persons 
65 years of age and over and 70 years of age and over, namely: 177,000 and 105,000, respectively. 


is 33 per cent, according to the census returns. The percentage of 
persons 65 years of age and over is considerably larger in the indoor 
pauper class than in the general population. In Massachusetts less 
than 6 per cent of the general population is 65 years of age and over. 
This contrast emphasizes the fact that institutional pauperism is 
very largely an incident or accompaniment of old age. 

Age at admission .—The great majority of the aged inmates entered 
the institution late in life. Less than 1 per cent of those for whom 
the age at entrance was stated in the returns became inmates before 
the age of 40; only 8 per cent entered before the age of 60; thus 92 
per cent had passed the sixtieth year before they took up residence in 

1 Adapted from Commonwealth of Massachusetts, Report on Old Age Pensions , 
1910, January, 1910, pp. 22-42. (Wright & Potter Printing Co., 1910.) 

460 





















OLD AGE 


461 


the almshouse. The percentages of admissions after the years of 40 
and of 60 are not so high for the almshouse population of the United 
States, being 69 and 40.5 respectively. The strikingly high proportion 
of persons entering pauper institutions late in life points to the close 
connection between old age and institutional pauperism. It is clear 
that such pauperism is in most cases the result of the infirmity of 
advancing years, rather than of the misfortunes of earlier years. 

Sex and conjugal condition .—In the classification of aged almshouse 
inmates according to sex, the striking fact is the heavy preponderance 
of males. The percentages are: Males, 61.4 per cent; females, 38.6 
per cent. The corresponding percentages in the pauper population of 
the United States are 64 per cent and 36 per cent respectively. In 
the total population of Massachusetts the division by sex is: males, 
48.7 per cent; females, 51.3 per cent. It thus appears that the male 
element of the population contributes a disproportionate share of 
institutional paupers. This may be due to the fact that aged women 
are more largely provided for by private charity than are aged men. 
The percentages of men and of women among the aged inmates of 
benevolent homes are 30.6 per cent and 69.4 per cent respectively, or 
approximately the reverse of the almshouse proportion. 

In respect to conjugal condition, the high percentage of widowed 
is significant. The figures are: single, 25.4 per cent; married, 15.4 
per cent; widowed, 57.8 per cent; divorced, 1.4 per cent. The 
figures for the marital condition of paupers given in the United States 
census report also show a heavy proportion of widowed, as follows: 
single, 52.1 per cent; married, 16 per cent; widowed, 27.8 per cent; 
divorced, 1.3 per cent; unknown, 2.8 per cent. For the general 
population of this state the percentages are: single, 55.54 per cent; 
married, 37.76 per cent; widowed, 6.36 per cent; divorced, 26 per 
cent; unknown, .08 per cent. It is evident that widowhood is an 
important factor in aged pauperism. 

Length of residence in Massachusetts .—The number of aged 
almshouse inmates who have lived in the state less than five years 
is very small, representing only 1 per cent of the total number 65 
years of age and over. On the other hand, 83.6 per cent have been 
residents of the state for thirty years or more. In the almshouse 
population of the United States the proportion of inmates with five 
years’ residence or less is 2.3 per cent. The percentage of persons 
in the total population of this state who have lived here five years 
or less is 25.17 per cent. It thus appears that recent immigrants do 


I 


462 THE WORKER IN MODERN ECONOMIC SOCIETY 

not furnish any considerable number of recruits for the aged almshouse 
population. 

Family connections. —The returns show that about one-half of the 
aged inmates of almshouses had adult children or other near relatives 
living at the time of entrance; but only a very small percentage have 
adult children or other near relatives able to assist them at the present 
time, namely, 7.7. This fact throws much light on the possibility 
of diminishing the almshouse population by establishing a pension 
system. It is evident that aged inmates having no children or 
relatives with whom they could live would not, as a rule, be enabled 
by the grant of small pensions to leave the almshouses. 

Country of birth and parentage. —The foreign-born constitute a 
much higher percentage of the aged pauper population than of the 
general population. The percentage of foreign-born among the 
almshouse inmates 65 years of age and over is 66.5; in the entire 
population of the state it is 30.6; and in the United States it is only 
15.3. In the total almshouse population of the state the foreign-born 
make up 53 per cent. Only 13 per cent of the native-born among the 
aged almshouse inmates were born in this state; whereas the percent¬ 
age of Massachusetts-born in the total native-born population of the 
state is 80. It is thus manifest that the great bulk of aged pauperism 
in the Commonwealth is imported rather than home-grown 

As regards the country of birth of the foreign-born, Ireland leads, 
with 70.5 per cent; Canada and England and Wales stand second and 
third, with 11.4 per cent and 9.1 per cent respectively; France, Italy, 
Russia, Poland, Hungary and Bulgaria have each less than 1 per cent. 

Physical condition and earning power. —The number of aged 
almshouse inmates having physical defects is large, as one would 
naturally expect. The total percentage of defectives is 93.8. Of the 
particular defects enumerated, the following show the highest per¬ 
centages: aged and infirm, 29.2 per cent of the total number having 
physical defects of some kind; chronic diseases, 25.8 per cent; rheu¬ 
matic, 18.2 per cent; crippled, maimed or deformed, 14 per cent; 
feeble-minded, 8.4 per cent. 

In respect to the present earning power of aged almshouse inmates, 
79.1 per cent of those for whom information was furnished were 
returned as wholly incapacitated for labor; 8.4 per cent as partially 
incapacitated; 12.5 per cent as able bodied. In the case of those 
whose earning power had been lost or impaired, sickness was assigned 
as a cause by 71.6 per cent; age and infirmity, by 32.2 per cent; 
accident by 15.4 per cent. 


OLD AGE 


463 


Occupations and wages in early life. —The returns show no great 
preponderance of any particular class of occupations. Manufacturing 
and mechanical pursuits rank first, with 33.7 per cent of the persons 
from whom returns were obtained; housekeeping and domestic 
service follow, with 22.6 per cent; and common labor stands third, 
with 14.5 per cent. The other occupations yield only small percent¬ 
ages. In the pauper population of the United States the laboring 
and servant class furnishes the largest percentage, namely, 47.8; agri¬ 
culture, transportation and other outdoor pursuits come second, 
with 23.7; and manufacturing and mechanical pursuits third, with 19. 

The usual weekly earnings are given as $5 or less in 20.4 per cent 
of the number of cases for which information could be obtained. 
The division according to higher wage groups is as follows: $5 to $10, 
36 per cent; $10 to $15, 29 per cent; $15 to $20, 10.1 per cent; over 
$20, 4.5 per cent. It thus appears that 56.4 per cent of the aged 
paupers earned $10 or less weekly in early life. The returns for last 
earnings before admission naturally show some decline of the propor¬ 
tions in the higher wage groups. The percentage with earnings of 
only $10 or less increase to 71.9 per cent. The division according to 
wage groups stood: $5 or less, 32.6 per cent; $5 to $10, 39.3 per cent, 
$10 to $15, 22 per cent; $15 to $20, 4.5 per cent; over $20, 1.6 per cent. 

Property holdings and losses in early life. —The number of aged 
almshouse inmates who had property above debts at some time in 
life is naturally small, representing only 27.4 per cent of the total. 
Of those holding property, the amount owned was $500 or less in 30.2 
per cent of the cases; $500 to $1,000, 24.8 per cent; and over $1,000, 
45 per cent. The number of property holders who sustained losses 
amounted to 97.4 per cent of the total owning property at some time. 
The causes of loss are given as: extra expenses for sickness or other 
emergency, 64.9 per cent; business failure and bad investment, 16.7 
per cent; intemperance and extravagance, 9.3 per cent; fraud, 6.2 
per cent; fire, 2.9 per cent. The high percentage on account of sick¬ 
ness and other emergency is notable. 

2. COST OF INDIFFERENCE TO OLD AGE 1 

A brief examination of the facts shows that the price paid by 
society for its indifference to old age is prodigious. It is a patent 
fact that public pauperism in old age is the dread and agony of thou¬ 
sands of workingmen and women. But there are more obvious costs. 

1 Adapted with permission from Abraham Epstein, Facing Old Age, pp. 46-63 
(Alfred A. Knopf, 1922.) 


464 


THE WORKER IN MODERN ECONOMIC SOCIETY 


a) The cost to the tax-payer. —The total cost to the tax-payer of 
the dependent aged in the United States is, of course, impossible to 
obtain. The records of charitable institutions are incomplete. The 
Massachusetts 1915 Decennial Census summarized their per capita 
expenditures as follows: 

“Exclusive of United States pensioners, the aggregate number 
of dependent persons in Massachusetts 65 years of age and over who 
received aid from all sources (both public and private) during the 
fiscal year ending March 31, 1915, was approximately 34,500. 
Of these, over 26,400 were receiving public relief at an aggregate 
cost of over $2,250,000; and nearly 10,000 were receiving private 
relief at a cost of over $983,000, making a total cost of about 
$3,234,000. The per capita expenditure for persons receiving aid 
from public sources was $85.24; and for persons receiving aid from 
private sources, $99.70. For males the per capita expenditure (public 
and private combined) was $98.64 and for females, $90.26.” 

The extent of contributions, given in a confidential manner, by 
private persons as well as by churches and fraternal societies through¬ 
out the country is, of course, impossible to ascertain. 

It is obvious that the millions of dollars spent annually on the 
care of the aged, whether through public or private agencies, ultimately 
come out of the pockets of the tax-payers. 

b) The cost to the institutional inmates or recipients of charity .— 
Of greater social importance than the mere expenditures of the 
enormous sums of money cited in the preceding pages is the degree 
of effectiveness and the adequacy of these methods of aged relief in 
meeting the purpose desired. The present methods of almshouse 
relief are looked upon as degrading and are of a repugnant nature, 
invariably resulting in the loss of self respect in the individual recipient 
and increased pauperism in the group. 

In practically all states outdoor relief is given by the different 
Poor Boards either to persons whose physical condition does not 
permit their removal to the County Homes, or to women with depend¬ 
ent children, temporarily in need, who are physically able to care for 
themselves. Outdoor relief may be given also to those who have 
someone to care for them in their own homes, or it is given to those 
who while physically able are in temporary need of relief. This form 
of relief is usually dispensed through the County Poor Directors 
themselves or through a clerk appointed by them. Cash is given only 
in rare cases. Generally an order for groceries or merchandise is 


OLD AGE 


465 


given to merchants extending credit to the Poor Directors. Of the 
constituency of these Boards, the Pennsylvania Commission states: 

“It is seldom that the county poor directors, county commissioners 
or other poor authorities have any definite knowledge or understanding 
of the problems of poor relief. These bodies are generally elected or 
appointed because of their political leadership.” 

c ) The cost to industry .—Much has been heard lately of the 
importance of increasing production. The reactions of mind upon 
body, in terms of industrial efficiency, can hardly be over-emphasized. 
But as long as the worker is left to grope with the problems of old 
age individually, the wage-earner—especially the middle-aged worker 
—can hardly be expected to maintain a happy state of mind. The 
thought of helplessness in the future gradually fills the life of a worker, 
especially if he is already advanced in age, with a fear and a feeling 
of fatalism which has a deadening influence upon everything he does. 

d) The cost to the younger generations and to society .—The present 
system of aged relief stands indicted not merely because it is inade¬ 
quate, incompetently administered, and destructive of industrial 
efficiency. It must be called to account chiefly because of the detri¬ 
mental effect it has upon the future. 

Because of the necessity of supporting the aged, the children are 
frequently doomed to under-nourishment; and to a life in the midst 
of crowded and unsanitary quarters; to leave school early in life and 
in their turn to join the ranks of the unskilled. 

3. OLD AGE, POVERTY AND MODERN INDUSTRY 1 

In modern industry middle age is old age, and the worn-out 
worker, if he has no children and if he has no savings, becomes an 
item in the aggregate of the unemployed. It was seen from our 
discussions that many industrial concerns—especially railroads—will 
not employ men after they have reached the age of 40. The labor 
contract in the factory system is made only for a temporary period, 
and the employer recognizes no obligation to support the workers 
during their declining years of inactivity. The aged worker is thrown 
upon his own resources. This condition of impotence is augmented 
still further by the break-up of the family in modern society which 
often thrusts the aged worker into a strange country or community 
without friends or relatives. 

1 Taken from Report of the Pennsylvania Commission on Old Age Pensions , 
1919, pp. 211-13. 


466 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Many of the aged poor must not be looked upon as paupers. 
They are the “picked survivors of our civilization/’ and only created 
paupers by industrial conditions. It sounds contradictory, but the 
effect of the blessings of civilization and the prolongation of life is 
only to prolong the period of inactivity, and, because of the growing 
complications of industry, the working period is also shortened. 
“There are approximately $1,250,000 former wage-earners who have 
reached the age of sixty-five years in want and are now supported 
by charity, public and private. In round numbers, it is costing this 
country $220,000,000 a year for the support of this great host of worn- 
out toilers.” 

Saving for old age is especially difficult as it is so remote and 
uncertain of attainment. Most people have a working belief in the 
power of kind fate to bring release in one form or another, before the 
tools have to be dropped. 

4. METHODS OF STATE INSURANCE 
FOR OLD AGE 1 

Assuming the need for a comprehensive system of care for the 
aged as proven, we are forced to choose one of three methods. I. 
A voluntary annuity system. II. A compulsory contributory old 
age insurance system. III. A system of pensions payable to the aged 
out of the public treasury. 

The first of these methods as a means of meeting the old age problem 
comprehensively must be discarded. Experience everywhere proves 
that people do not voluntarily purchase insurance or annuities. After 
40 years of experience in England only 150 persons annually purchase 
annuities under the post-office plan. In Massachusetts and Wisconsin, 
the number of persons who have taken advantage of the insurance 
provided at cost under state auspices are insignificant when compared 
to the number requiring such provision. A plea for the purchase of 
annuities should, however, be formulated by the state or federal 
government so that those who wish this method of voluntary provision 
for old age at cost may obtain it. This Commission has strongly 
recommended to the federal authorities that the purchasers of war 
savings stamps be allowed to convert them into annuities. 

The second plan, compulsory contributory old age insurance, has 
some fundamental difficulties which appear insurmountable. These 
difficulties are briefly summarized below. 

1 Taken from Health Insurance, Old Age Pensions, pp. 268-71, by The Ohio 
Health and Old Age Insurance Commission. N (Published at State Bindery, 
Columbus, 1919.) 


OLD AGE 


467 


The present generation of aged people, because they have not paid 
premiums throughout their working life, would not be benefited, 
unless an exception were made and pensions were paid to them from 
the public treasury. Even those who are past middle life would be 
only partially benefited and the returns from their insurance payments 
for a number of years would not be sufficient to meet their needs. 
A partial pension for them would be necessary, therefore. It would 
be fully 35 years before the system would be working satisfactorily 
as an insurance system without supplementing the insurance by a 
partial or full pension. 

It would be necessary to keep an account with all employed 
persons from the time they began work until death. The shifting of 
population from state to state, from place to place and from employer 
to employer makes the problem difficult, if not impossible of solution. 
The details of such a plan would be exceedingly complicated and the 
expense very great. The problem differs from that presented by 
health insurance because old age insurance, like life insurance, is 
insurance for a hazard in the distant future, whereas health insurance 
covers primarily the hazards of the immediate present. Under the' 
former the insured derives no immediate benefit from his accumulated - 
payments; under health insurance, with the ever present risk of sick¬ 
ness, the insured benefits from the “protection” even though he may 
not be ill and may not require the benefit. Partially on this account 
“surrender values,” which the law compels life insurance companies 
to provide for those whose policies lapse after premiums have been 
paid for a number of years, have not developed in health insur¬ 
ance. Instead, when a man ceases health insurance payments, his 
account is closed. As in life insurance so in old age insurance, a man 
who fails to continue his policy should receive a surrender value. 
In a state system of obligatory old age insurance this would mean 
that when a man insured against old age leaves the state or for other 
reasons ceases to be insurable, he is entitled to at least a portion of 
the accumulation from his own payments. The constant fluctuation 
of the transient population would involve a scheme of old age insurance 
in endless difficulties. 

The provision for a worker’s life and dependents after they become 
aged is another problem which cannot be adequately solved under 
old age insurance limited, as it is customarily, to wage-earners. 
A large part of the dependent aged are widows. They were never 
wage-earners and consequently would have no rights under an insur¬ 
ance plan requiring contributions from income. Theoretically the 


468 


THE WORKER IN MODERN ECONOMIC SOCIETY 


problem might be solved by increasing the rates to cover a man and 
his wife but actually the burden would be, under present conditions, 
too heavy for the wage-earner to bear alone. A subsidy by the state 
or by the employers would make the scheme partially a pension 
system. The same problem arises in connection with the employer, 
the man of small business, the self-employer or the wives and depend¬ 
ents of such persons who may reach old age without a competence 
as a result of misfortune of one kind or another. 

The cost of administration would be high because of the extensive 
and detailed account keeping with large numbers of people. More¬ 
over, it would raise the question whether the money thus spent could 
not be more effectively used if it were applied directly to the payment 
of pensions. 

In view of the difficulties accompanying the introduction of a 
compulsory old age insurance plan and the certainty that a voluntary 
annuity system would not meet the needs, we are forced to consider 
the alternative of a pension payable out of the public treasury either 
from moneys collected by the regular system of taxation or by a 
special tax designed particularly for the purpose. 

The old age pension plan has the virtue of simplicity. It is 
comparatively easy to administer, involving only the determination 
of the age of the applicant, and other easily determined facts such as 
the length of residence, citizenship and recent moral record. The 
state of Ohio already has had experience with similar problems and 
has solved them by the pension system. Pensions for the blind have 
been paid for some years and mothers’ pensions have been paid since 
1913. Nearly $1,000,000 annually is paid out for these pensions. 

Under the insurance plan the direct contribution made from wages 
has the advantage of making the insured person feel directly and per¬ 
sonally responsible for his old age. The same result could undoubtedly 
be reached by a special tax which would be equitable upon all, such 
as a graduated income and an inheritance tax, supplemented by a tax 
upon production or a tax possibly upon those industries which do not 
hire or retain the older men. However, the use of the regular 
machinery of taxation for the collection of an equitable tax for pensions 
to the aged certainly has advantages over a separate system of collec¬ 
tion, organized upon an insurance system. 

There are safeguards which should be thrown around an old age 
pension system to prevent the danger of pauperization and of depend¬ 
ence upon the state. The pension should be low enough to prevent 


OLD AGE 


469 


voluntary dependence upon it as the entire support for old age. 
A plan of voluntary annuities for old age should be incorporated in 
the pension plan in order to encourage supplementing the pension. 
Provision for deferred pensions, under which the pensioner would 
receive a larger pension by deferring acceptance beyond the age at 
which he is legally eligible, would be advantageous in encouraging 
special thrift. 

The pension plan approved by the majority of the Commission 
provides for an old age pension of not over $5 a week beginning at 
age 65. No pension is to be paid to a person who has an annual income 
of $350 or more; and the amount of the pension to persons having 
an income less than $350 a year, is to be apportioned in such a way 
that the total annual income shall not exceed $350. Property pos¬ 
sessed by a pensioner shall revert to the state upon the death of the 
pensioner to be used to reimburse the state for the pensions paid. 
Any part left over will then be given to the lawful heirs, if any. 

The following persons are excluded: I. Aliens and persons who 
have been citizens for less than 15 years. II. Persons who have not 
been residents of the state for 15 years. III. Persons convicted of a 
penitentiary offense within ten years. IV. Persons who have disposed 
of any property in order to qualify for a pension. V. Tramps and 
professional paupers. 

The whole system should be administered by the state through 
a state pension commission of four members. Local administration, 
it is urged, should be combined with other welfare work of the county 
under a board of county welfare. 

[Note: In 1923 the legislatures of Nevada and Montana passed 
old-age pension acts guaranteeing those of seventy years and over 
an income of one dollar a day. Similar bills are pending in other 
states.— Ed.] 

5. SOME OBJECTIONS TO A NON-CONTRIBUTORY 

SYSTEM 1 

That a system of non-contributory old age pensions would subject 
our legislatures to the same political pressure constantly to increase 
the amount of the pension allowed and to enlarge the list of those 
entitled to a pension as has been applied to Congress in the case of 
the Civil War pensions is hardly to be doubted. Indeed, such has 

1 Taken from M. B. Hammond, Minority Report , pp. 280-81. (Ohio Old Age 
Pension Commission, 1919.) 


470 


THE WORKER IN MODERN ECONOMIC SOCIETY 


been the case in other English speaking countries. New Zealand, 
which has had the system in operation longer than has the motherland, 
or any other of the colonies, offers the best example of this pressure. 
The system was adopted in that country in 1898. The act received 
important amendments in 1900, 1902, 1905, 1908, 1911, and 1914, 
always in the direction of making the pension allowance greater or 
the number of persons eligible to a pension larger. The amount of 
the pension has been raised and the age at which it may be granted 
has been reduced from 65 years to 60 years in the case of men and 55 
in the case of women. The amount of independent incomes which 
may be received by pensioners without sacrificing the right to a 
pension has been raised. The provisions regarding the holding of 
property, the length of absence from the Dominion, moral qualifica¬ 
tions, etc., have been “liberalized” in such a way as to enlarge the 
pension list. 

In 1911 when the amendment to the old age pension act had been 
passed, the Evening Post of Wellington, which has always favored 
the progressive social legislation of the Dominion, gave the following 
editorial expression to this tendency to amend the old age pension 
act: “Whatever other business has to be neglected, Parliament is 
never too busy to amend the Old Age Pension Act. It is a measure 
which makes a strong appeal both to the sentimentalist and to the 
politician, and unfortunately the combination has constantly proved 
strong enough to overpower the voice of perfect statesmanship. 
Theoretically, the self-interest of the citizen imposes a stronger 
check upon extravagance in a democracy than under any other form 
of government, yet in practice we unfortunately see that the general 
interest of the taxpayer in the maintenance of economy is often so 
diffused, languid and feeble a force that the politician who is accus¬ 
tomed to take the line of least resistance finds it a much simpler and 
safer matter to yield to the pressure of a small but insistent section.” 

This one-sided pressure would not be present in the case of old 
age insurance to which those who were ultimately to be eligible to an 
annuity were compelled to contribute a part of the funds during 
their working years. Demands for an increase in the amount of the 
annuities and for enlarging the eligible list would still be made, but 
they would meet the resistance of those who did not desire to increase 
their contributions to the fund. The result would be that the legisla¬ 
ture would have an opportunity to weigh the arguments for and against 
the policy of extension. Whatever amendments were made would 


OLD AGE 


47 i 


follow the dictates of reason rather than those of sentiment and 
political fear. 

PROBLEMS 

1. In what ways does the machine tend to reduce the work-life of the 
worker ? 

2. Is it not true that machine industry with its greatly diversified tasks 
makes possible the use of old men? Why then is old age a serious 
problem ? 

3. “‘The old man’ problem is increased through the separation of the 
worker from land.” How? 

4. “Institutional pauperism is largely an incident or accompaniment of 
old age.” Do the facts support this statement ? 

5. If the worker actually feared dependency in old age would he not pre¬ 
pare for it by saving while young ? 

6. “Thrift is what we need to teach. Then the problem of dependency 
during old age would take care of itself.” Do you agree ? 

7. If a worker grows old while in the employ of a particular business con¬ 
cern, should not that business be called upon to support him in his old 
age? 

8. “Employers are beginning to realize that a system of pensions for 
employees pays dividends.” Give specific meaning to the statement. 

9. Since the public in general consumes the products made by workers why 
shouldn’t the state provide old-age pensions out of general tax funds ? 

10. “Old-age pensions make a strong appeal to the sentimentalist and the 
politician and the combination of the two prove strong enough to over¬ 
come common sense.” Comment. 


CHAPTER XVII 
UNEMPLOYMENT 

i. DEFINITION OF UNEMPLOYMENT 1 

Perhaps the first question to ask is whether it is possible to give 
any satisfactory definition of unemployment. So many people are 
called “unemployed” who are really underemployed, and under¬ 
employment may become unemployment. Casual labour, for example, 
may become so casual that the man cannot be said to be employed in 
any real sense, or personal defects may make regular employment 
quite impossible. The definition of unemployment given by Mr. 
Seebohfn Rowntree, a definition also adopted by several investigators 
in America, is as follows: “A person is unemployed who is seeking 
work for wages, but unable to find any suited to his capacities and 
under conditions which are reasonably judged by local standards.” 
This may not be a complete definition, but for practical purposes it 
will suffice. It rules out the unemployables, the inefficient, the 
work-shy; it rules out workers who are ill or mentally defective; 
but it includes a Trade Unionist who refuses to accept a lower wage 
than his Trade Union allows him, even though he can obtain work at 
that lower wage. 

In dealing with the causes of unemployment we must discriminate 
in the first instance between those who are unemployed for purely 
personal reasons and those who are suffering from the failure of modern 
civilisation to solve what is after all an economic question. We must 
look for causes, because remedies will be futile unless the causes are 
known and understood. They will be no real remedies but merely 
temporary palliatives. At the root of the trouble is the failure, for 
whatever reason, of the modern state to make the necessary adjustment 
between the demand for and the supply of labour. 

2. FLUCTUATIONS IN UNEMPLOYMENT 

a) UNEMPLOYMENT IN THE UNITED STATES, I902-17 2 

The labor shortage .—A study of Chart F and Table LXXIV brings 
out striking facts. First, the number of unemployed in cities of the 

1 From Percy Alden, Unemployment, in composite volume Labour and Industry. 
(Manchester, 1920.) 

2 Hornell Hart, Helen S. Troustine Foundation, Cincinnati, Ohio, pp. 48, 51-53. 


UNEMPLOYMENT 


473 



SJT?3^\ 

Z161 9161 S161 ti6i £161 ci 6 i 1161 0161 6061 8061 £061 9061 S061 to6i fo6i zo6i 































474 


THE WORKER IN MODERN ECONOMIC SOCIETY 


United States (entirely omitting agricultural labor, for which no 
reliable data are now available) has fluctuated between 1,000,000 and 
6,000,000. The least unemployment occurred in 1906-1907, and 
1916-1917, while the most occurred in 1908 and in 1914 and 1915. 

TABLE LXXIV 

Estimated Number in Millions of Unemployed Workers 
in Occupations Other Than Agriculture in the 
United States by Years 1902-17 


Year 

Average 
Number 
in Millions 

Percentage of 
Total Workers 
Unemployed 

1902. 

2.7 

14.1 

1903 . 

1.9 

9-3 

1904 . 

2.4 

II-S 

1905 ... 

2.0 

9-3 

1906. 

1.2 

5-5 

1907 . 

1-4 

6.0 

1908.•. 

3-5 

14.8 

1909 . 

2.1 

8.6 

1910. 

i -7 

6-5 

1911. 

2.8 

10.8 

1912. 

2.6 

9.6 

1913 . 

2.6 

9-3 

1914 . 

4-5 

15-3 

1915 . 

4.6 

16.0 

1916. 

2.1 

7 -i 

1917 . 

1.4 

4-7 


TABLE LXXV 

Estimated Number in Millions of Unemployed by Months, 1902-17 


January. 3.4 

February. 3.1 

March. 2.8 

April. 2.5 

May. 2.4 

June. 2.5 


July. 2.6 

August. 2.3 

September. 2.0 

October. 1.9 

November. 2.1 

December. 2.4 


The average number unemployed has been two and a half million 
workers, or nearly 10 per cent of the active supply. 

Much has been written lately of the drain on agricultural labor 
and the increase in the number of women workers caused by the labor 
shortage. It will be noted that in 1907 and 1917 the demand for 
labor exceeded the normal supply, and that additional workers were 






































UNEMPLOYMENT 


475 


called in, as indicated by the humps in the supply line in these years. 
Even at these times, however, unemployment is shown. The reason 
is this: Urban industries require a working labor-margin of at least 
four or five per cent , or a million to a million and a half workers. These 
are the men and women who, though normally employed, are tem¬ 
porarily not working because of sickness, seasonal fluctuations in 
their trades, changing from one position to another, strikes, shortage 
of material or transportation facilities, and so forth. Hence, we 
have the paradox of a million and a quarter unemployed at the same 
time with an unprecedented demand for labor. 

The amount of the drain on agriculture can be estimated roughly 
from the fact that in October, 1917, the non-agricultural industries 
employed approximately 30,900,000 workers, in addition to the 
working margin of at least 1,300,000, while the normal supply of 
non-agricultural labor was only about 30,300,000. This meant an 
overdraft of approximately 1,900,000. Since immigration was 
practically cut off, this shortage was made up from women and farm 
workers. Certainly a million, and probably more, farm workers 
were thus absorbed, in addition to about 500,000 who were drafted, 
or enlisted. This was the condition, however, at the peak of demand. 
Winter decreased the labor overdraft by at least 1,000,000, and 1918 
may see very different conditions front last year. 

Seasonal fluctuations. —Chart F reveals certain marked rhythms 
of demand. Each year sees more or less pronounced peaks of demand 
in spring and fall, with a slight depression in midsummer, and a 
marked depression in winter. The first line in Table I shows that, 
for the past sixteen years combined, the average number of unemployed 
has tended to be greatest in January , averaging three and a third millions , 
and least in October, averaging less than two millions. This yearly 
rhythm is due chiefly, either directly or indirectly, to changes in 
temperature. 

b) FLUCTUATIONS IN UNEMPLOYMENT IN MASSACHUSETTS, 

NEW YORK, AND WISCONSIN 1 

The three accompanying charts are based on data supplied by 
state bureaus. The first chart, showing the fluctuations in the 
unemployment of organized wage earners in Massachusetts, is based 
on data and a chart furnished by Mr. Roswell F. Phelps, director of the 
Division of Statistics of the Department of Labor and Industries. 

1 Taken with permission from Ernest R. Bradford, “Methods Used in Measur¬ 
ing Unemployment,” Quarterly Publication of the American Statistical Association, 
December, 1921. 


476 


THE WORKER IN MODERN ECONOMIC SOCIETY 


CHART G 


FLUCTUATIONS in UNEMPLOyMENT 

/// M A S5A CHUSE T T3, 1908~ 1921 
percehtacEs of organized hr age 

FARMERS UHEMPLOVEO AT E/iD OF EACH QUARTER 


Pen ceht 
one mpl o ye d 



l$08 1909 1910 19" I?' 2 1913 1914 19/S 19IG 1917 /$>// 1919 1920 1921 


* Strike 

Reoor 25 o,ooo IYrce Errhers //y 1920 were 

COVER ED 19 y THESE REPORTS , OE WHOM RHOOT 

& 0,000 were on empl oyED JrH. IJ 92 L 

The h/chest po/ht of on emplovme /v t //y 

MpSSRCHU SETTS WPS PERCHED RT THE CLOSE OF 
/ 920. IT HRS FPL LEA/ S/HCE. 

The shrded port/ohs of the chrrt 

REPRE SEHT ON E MPLOV ME NT DUE TO LRCK OF 
WORK OR MHTER/RL. 


The Co 


Commonwealth of Massachusetts. 

-Dept, of Labor S Indus tries 
Oft'Sion of Sr & t/srics 































UNEMPLOYMENT 


477 


CHART H 

































478 THE WORKER IN MODERN ECONOMIC SOCIETY 


The second chart, showing variations in the number of factory 
employees in representative factories in New York and Wisconsin, 

CHART I 


PERCENTAGES OF UNEMPLOYMENT OE 
ORGANIZED YYACE EARNERS /N NEW YORK 



ti y 5 Mrf 

//v ous TAl/Ai. Co*4*f 

/3ai.4.er //v &S" 


is made from data supplied by Dr. E. B. Patton, chief statistician 
of the New York Department of Labor, and by the Wisconsin State 









































































UNEMPLOYMENT 


479 


Industrial Commission. The New York curve starts at ioo in July, 
1914; although 100 in the Wisconsin curve is as of February, 1915, 
the two curves are plotted in this way in order to show more clearly 
the similarity of movement. The line of normal increase of factory 
wage earners in New York State from 1904-1914—about 12 per cent 
for the five year period—is based on the figures of the United States 
Census of Manufactures. 

The third chart, showing seasonal and other fluctuations in em¬ 
ployment among organized wage earners in certain trades in New York 
State, 1904-15, is based on charts published in Bulletin No. 85 of the 
New York State Industrial Commission. 

c) UNEMPLOYMENT ATTENDING THE TIME OE THE 

BUSINESS CYCLE 1 

Introduction .—The extent of unemployment which may arise 
from a turn of the business cycle is shown by the following table of 
the U.S. Bureau of Labor Statistics, giving comparative numbers of 


TABLE LXXVI 


Industry 

Number on Pa] 

1920 

f-Roll in March 

1921 

Percentage 
of Decrease 

Iron and steel. 

188,007 

133,738 

28 

9 

Automobiles. 

152,692 

70,947 

53 

5 

Car building and repairing. 

57,245 

48,728 

14 

9 

Cotton mfg. 

60,928 

54,494 

2 

4 

Cotton finishing. 

12,468 

11,401 

8 

6 

Hosiery and underwear. 

3 2 , 7 i 8 

2 i ,574 

34 

1 

Woolen. 

52,234 

38,831 

25 

7 

Silk. 

I 5 , 4 i 4 

12,735 

17 

4 

Men’s clothing. 

31,576 

23,881 

24 

4 

Leather. 

15,779 

10,124 

35 

8 

Boots and shoes. 

74,685 

55,525 

25 

7 

Paper making. 

32,828 

27,786 

15 

4 

Cigar mfg. 

17,252 

14,539 

15 

7 

Coal (bituminous). 

28,510 

25,899 

9 

2 


pay-roll in March, 1921, in contrast to March, 1920. The returns 
were supplied by more than 800 establishments employing about 
560,000 workers, in 13 manufacturing industries and in coal mining. 

Accompanying the decrease in total employment, statistics from 
the same source point to the even more rapid decrease in total pay¬ 
rolls which indicates not only decreasing wages but increasing partial 
unemployment. 

1 Taken from Monthly Labor Review , U.S. Bureau of Labor Statistics, May, 
1921, pp. 100. 






























480 THE WORKER IN MODERN ECONOMIC SOCIETY 

In the words of the Bureau, “The figures for March, 1921, when 
compared with those for March, 1920, for identical establishments, 
show a considerable decrease in the number of persons employed. 
The largest decreases are 53.5 per cent, 35.8 per cent, and 34.1 per 
cent in the automobile, leather, and hosiery and underwear industries 
respectively. The smallest decrease is 2.4 per cent in the cotton 
manufacturing industry. 

The total wages paid in these 14 industries have decreased at a 
still greater rate. The amount of pay-roll had decreased by 64 per 

TABLE LXXVII 


Industry 

Amount of Pay-Roll in March 

Percentage 
of Decrease 

1920 

1921 

Iron and steel. 

14,655,671 

8,173,095 

44.2 

Automobiles. 

5,148,279 

1,853,904 

64.0 

Car building and repairing. 

3,638,501 

3,227,251 

11 • 3 

Cotton mfg. 

I,266,694 

1,010,912 

20. 2 

Cotton finishing. 

288,605 

252,296 

12.6 

Hosiery and underwear. 

651,079 

352,883 

45-8 

Woolen. 

1,312,600 

871,666 

33-6 

Silk. 

727,960 

548,594 

24.6 

Men’s clothing. 

1,119,382 

792,844 

29. 2 

Leather. 

408,208 

216,729 

46.9 

Boots and shoes. 

1,841,707 

1,321,274 

28.3 

Paper making. 

877,021 

685,349 

21.9 

Cigar mfg. 

375,573 

289,200 

23.0 

Coal (bituminous). 

1,885,868 

1,549,286 

17.8 


cent in the automobile, 46.9 per cent in the leather, 45.8 per cent in 
the hosiery and underwear, and 44.2 per cent in the iron and steel 
industries. 

For Unemployment Due to Labor Disturbance see chapter xx, 
Selection 4 c, page 620. 

3. SEASONAL AND INTERMITTENT 
UNEMPLOYMENT 

a) EXTENT OF SEASONAL AND INTERMITTENT UNEMPLOYMENT 1 

IDLE MEN 

i. Minimum unemployment .—The amount of idleness or unem¬ 
ployment in industry can only be evaluated through rough estimates. 
There is no national machinery for collecting the facts. 

1 Adapted with permission from John Koren and others, “Unemployment,” in 
volume on Waste in Industry. (Federated American Engineering Societies, 
Washington. D.C. 1921.) 



























UNEMPLOYMENT 


481 


But in the best years, even the phenomenal years of 1917 and 
1918, at the climax of war-time industrial activities, when plants 
were working to capacity and when unemployment reached its lowest 
point in twenty years, there was a margin of unemployment amounting 
to more than a million men. This margin is fairly permanent; 
seemingly one or more wage earners out of every forty are always 
out of work. 

2. Intermittent unemployment .—In addition to minimum and 
climacteric unemployment, many essential industries show a high 
unemployment or idleness once a year or oftener. Practically all 
industries are in a sense seasonal. To present a few examples: 

ESTIMATED PROPORTION OF POSSIBLE WORKING 
DAYS LOST ANNUALLY IN CERTAIN IN¬ 
DUSTRIES THE COUNTRY OVER 

Industry 

Clothing. 

Shoes. 

Building trades. 

Bituminous coal 


Proportion of Time Lost 
in Average Year 

... 31 per cent 
... 35 per cent 
... P er cent 
... 27 per cent 


PROPORTION OF POSSIBLE WORKING DAYS LOST IN 
THE “BOOM” YEAR OF 1919 BY WORKERS IN 
REPRESENTATIVE ESTABLISHMENTS* 


Industry 

Paper box. . . 
Confectionery 

Overall. 

Brick. 

Chemical.... 
Glass. 


Proportion of Time Lost 
During 1919 

... 10 per cent 
... 13 per cent 
... 13 per cent 
... 15 per cent 
... 16 per cent 
... 13 per cent 


* Adapted from Monthly Labor Review, April and May, 1920, quoted in Waste in Industry, 
p. 265. 


Seasonal unemployment .—Seasonal industries may be divided for 
convenience into two general classes: 

1. Those employing a large number of skilled and semi-skilled 
workers who depend upon the industry for livelihood during the year. 
Such industries are the building trades, coal mining, the clothing 
trade, etc. 

2. Those employing casual unskilled laborers who travel from 
place to place as the demand appears, such as farming, lumbering, 
canning, etc. 












482 


THE WORKER IN MODERN ECONOMIC SOCIETY 


SEASONAL INDUSTRIES EMPLOYING SKILLED WORKERS 

Brick and tile products .—According to the U.S. Census of Manu¬ 
facturers, 1914, there were 100,182 workers employed in this industry. 
It is estimated that not more than 50,000 of them were employed in 
the mid-winter months. 

Coal mining .—There are over 750,000 men employed in coal 
mining who are idle during a substantial portion of the year. The 
number of employees and the average number of days worked for the 
6-year period, 1913 through 1918, are reported by the U.S. Geological 
Survey. During this 6-year period anthracite miners worked on an 
average of 260.5 days out of a possible 308, thus losing an average of 
15.5 per cent of working days. Bituminous miners worked on an 
average of 226 days and thus lost 26.7 per cent of possible working 
days. 

The report of the United States Bituminous Coal Commission 
says, 1920: “The coal industry is a part-time industry, the number 
of idle days, out of a possible 308 working days, being 63 in 1918 and 
115 in 1919. On the average for the past 30 years, the number 
of possible working days, when the mines were not in operation, 
was 93.” 

Anthracite coal mining .—While the causes of irregularity of 
employment in anthracite coal mining are not precisely the same as 
in bituminous coal mining, the degree of irregularity is at least as 
great. According to the report made to the United States Anthracite 
Coal Commission by W. Jett Lauck, on behalf of the United Mine 
Workers of America, the anthracite mine workers have suffered more 
from irregularity of employment than have the bituminous mine 
workers. The report says: “During the period since 1881 the anthra¬ 
cite workers have had an opportunity to work on an average only 
212 days out of each year. This means 92 days of idleness, 30 per 
cent of the working year during which they have no opportunity to 
earn a living wage.” 

SEASONAL TRADES EMPLOYING UNSKILLED LABOR 

Agriculture .—The farming of the country is carried on by local 
labor supplemented chiefly by the casual unskilled labor. It is with 
the latter class that the present survey chiefly has to deal. An 
indication of the demand for farm labor for the first half of the year 
is afforded by a report made by the U.S. Employment Service, 1918. 


UNEMPLOYMENT 


483 


Number of farm laborers called for during: 


January (in round numbers). 100 

February. 1,000 

March. 9,000 

April. 18,000 

May. 23,000 

June. 70,000 


These figures reflect the demand for the country as a whole. 
The seasonal demand varies with the section of the country. In the 
New England states, for instance, it is greatest in April for the first 
half of the year considered, while in the winter wheat belt the peak 
of the demand comes in June. 

Canning and preserving .—The canning of food products is neces¬ 
sarily seasonal because it must be accomplished when fruits and 
vegetables ripen. 

The fish canning industry located on the Atlantic and Pacific 
seaboards is intermittent to a less degree than fruit and vegetable 
canning. Different kinds of fish are handled at different periods of 
the year, thus permitting a long season. The season at best extends 
over ten months of the year. Midwinter is the time of maximum 
employment, a period of idleness occurring in the spring months. 
The canning season is considerably shorter than the curing and 
packing seasons. Much of the extra labor taken on in rush seasons 
is local, and where possible women are employed. 

Fruit and berry canning is largely done in eastern and far western 
states; vegetable canning in the central portions of the country. 
California is the most important state in which fruit and berry canning 
is undertaken. Over 55 per cent of the total product is canned within 
a maximum of eight weeks. Similar conditions exist in the fruit and 
berry canning industry in the eastern states. 

Lumber industry .—The total number of men employed in the 
United States in 1910 as lumbermen, raftsmen and woodchoppers 
was reported to be well over 160 thousand by the U.S. Census. The 
greater part of the lumber cut is made in the winter months. 

Dock labor .—The work of stevedores is necessarily intermittent, 
depending on the amount of shipping in harbor at any given time. 
To meet the emergencies of rush seasons a large surplus of labor is 
essential. 








484 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Employment of casual labor in winter .—The fact that the basic 
industries of the country, including agricultural and railroad con¬ 
struction work, are absolutely dependent upon migratory workers, 
points to the necessity of solving the winter unemployment problem 
of casual labor. 

Outside of logging, ice cutting and snow shoveling there is small 
requirement for this type of supplementary labor. These workers 
tend to concentrate in the large cities, depending on odd jobs, on 
charity, and sometimes on crime for a livelihood. 

b) SEASONAL UNEMPLOYMENT: THE NEW YORK GARMENT 

INDUSTRIES (1915) 1 

The dress and waist industry is no exception to the rest of the 
garment industries in being subject to extreme seasonal fluctuations. 
There are about six months of activity, four in the spring and two in 
the fall, half of them carried on under extreme, almost feverish, 
pressure, followed by an equal period of subnormal activity with 
almost complete stagnation for one month in the year. 

The report shows that there is a tendency to retain as many 
employees engaged during the busy season as possible and to keep 
all of them partly employed during the slow season. This is especially 
true of the pieceworkers, as it is to the interests of both the manu¬ 
facturer and his employees—the manufacturer because it enables 
him to maintain his organization intact ready to respond to the 
demands of the market at a moment’s notice; the workers, because 
it enables them to earn what little money they can during the dull 
season instead of remaining totally idle. In the case of week workers 
this is less true, the manufacturers preferring to keep busy all the time 
whatever workers they can retain. But here, too, there is a tendency 
to accede to the desires of the union and keep as many people on the 
pay roll as possible by dividing the force into two or more groups 
which report for duty at the factory by turns on alternate days or 
weeks, and at the same time are kept fully employed while at the 
factory. 

Taking the wages paid out in the industry during the busiest 
week of the year and expressing this as 100, the investigation has 
shown that the average weekly wage earned by all the workers 

1 Adapted with permission from N. I. Stone, Wages and Regularity of Employ¬ 
ment in Dress and Waist Industry of New York , 1915. (Government Printing 
Office.) 


UNEMPLOYMENT 


485 


during 1912 was equal to 73 per cent of that of the busiest week of 
the year. That is to say, if a worker’s wage during the busiest week 
of the year was equal to $15 a week, his weekly average throughout 
the year would amount to $10.94. 

c) INTERMITTENT EMPLOYMENT 1 

Temporary shutdowns and layoffs .—An element frequently over¬ 
looked in the unemployment situation is what opportunity do workers 
nominally employed have to work a full week and to draw a full week’s 
pay. For instance, a report of the Connecticut Commission on the 
Condition of Wage-earning Women and Minors in 1913 showed that 
for 942 females in the cotton industry, the weekly earnings were 13.9 
per cent less than full-time earnings; in the silk industry, 1,175 
females received 18.2 per cent less than full-time earnings; in brass 
factories, 662 females received 14.1 per cent less; and in the metal 
trades, 2,541 females received less than 13.9 per cent full-time earnings. 
The frequent layoffs for half-days and days in the bituminous coal 
industry are another case in point. 

During 1919 in the paper box industry, 4,311 employees in 77 
establishments averaged 90 per cent of full time; in the women’s cloth¬ 
ing industry, 6,772 women workers employed in 157 establishments 
averaged 91 per cent; in the confectionery industry, 12,152 workers 
in 101 establishments averaged 87 per cent; and in the overall 
industry, 6,546 workers in 129 establishments averaged 87 per cent 
of full time. In the brick, chemical and glass industries the per¬ 
centage of full time worked was 85, 84 and 87 respectively. When 
this record is examined in detail, it appears that some classes of 
workers are more frequently put on short time than others. White 
goods finishers averaged 79 per cent of full time, though the average 
for the women’s clothing industry as a whole was 91 per cent. Laborers 
in the brick industry worked 77 per cent of full time, while the average 
for the industry as a whole was 85 per cent. Any number of similar 
examples might be cited. 

1 Adapted from Waste in Industry , p. 265. (Published by Federated American 
Engineering Societies, Washington, D.C., 1921.) 



4 86 


THE WORKER IN MODERN ECONOMIC SOCIETY 


d) COMPARATIVE UNEMPLOYMENT IN THE UNITED STATES, 
UNITED KINGDOM, AND GERMANY 1 

This table shows the mean percentage of work people in certain 
trade unions unemployed in each of the years 1904-13: 

TABLE LXXVIII 


Year 

New York 
State 
(U.S.A.) 

United 

Kingdom 

Germany 

1904 . 

12. I 

6.0 

2.1 

1905 . 

8-5 

5 -o 

1.6 

1906. 

6.8 

3-6 

I . I 

1907 . 

13.6 

3-7 

1.6 

1908. 

28.0 

7-8 

29 

1909 . 

14.9 

7-7 

2.8 

1910. 

13.6 

4-7 

1 -9 

1911. 

18.7 

3 -o 

1.9 

1912. 

15.2 

3-2 

2.0 

1913 . 

20.9 

2.1 

2.9 

Mean. 

15-2 

4-7 

2.1 


4. EFFECTS OF UNEMPLOYMENT 

a) SOME SOCIAL EFFECTS OF UNEMPLOYMENT 2 

i. Lessened income .—Unsteady employment affects wages in three 
ways: “It reduces the amount of the workmen’s earnings; it causes 
irregularity of income; and it decreases his efficiency.” Whether 
unemployment is as important as sickness in causing the breakdown 
of family independence is a disputed question; nevertheless, it plays 
a great role in family demoralization .... in two-thirds of the 
families who come under the care of the Charity Organization Society 
in industrially normal times, one or more wage-earners are unemployed 
at the time of their application for aid.” Three-fourths of the 
applications for help to the New York Charity Organization Society 
come to them by reason of sickness. In Chicago, according to figures 
from the United Charities, “unsteady work caused a little over one- 
half of the applications for help.” 

Lescohier cites an investigation in Connecticut which showed 
that the actual earnings of employees in different industries fell from 
13 per cent to 18 per cent below full-time earnings. In New York 

1 Adapted from League of Nations Report on Unemployment, Item 2 of the 
Agenda, p. 13. (Washington: International Labor Conference, 1919.) 

3 Adapted from John L. Gillin, Poverty and Dependency, pp. 467-70. (Century 
Co., 1921.) 


























UNEMPLOYMENT 


487 


62.1 per cent of the paper-box workers and 63.4 per cent of the con¬ 
fectionery workers fell more than 10 per cent below full-time earnings. 

2. Destruction of the worker's efficiency. —As Lescohier has so well 
said of the worker, unemployment destroys his capacity for continuous 
consistent endeavor; saps self-respect and the sense of responsibility; 
impairs technical skill; creates a tendency to blame others for his 
failures; prevents thrift and hope of family advancement; sends 
him to work worried and underfed. 

3. Effects on the family. —It forces the mother out of the home to 
supplement the earnings of the man; it takes children from school 
at the earliest possible moment and places them in industry. It 
forces the family to move into poorer quarters. 

4. Industrial and political unrest. —The unemployed man feels 
that in unemployment he has one more cause of complaint against 
the industrial order. 

5. Social demoralization. —The moral standards of the unemployed 
man are impaired by spells of idleness; time lies heavy upon his 
hands; and in the course of time even the good workman may become 
desperate. 

In the dull time of 1914 it is reported that in Boston men com¬ 
mitted petty crimes in order that they might be sent to the workho'use. 
Then they were sure of their keep while their wives might draw from 
the city 50 cents a day. In 21 cities burglaries increased 30 per cent 
over the number in 1912, vagrancy 51 per cent, robberies 61 per cent, 
and mendicants 105 per cent. The divorce and suicide rates also 
increased. 

b) CUMULATIVE EFFECTS OF UNEMPLOYMENT 1 

Irregularity of unemployment is an aspect of the wages problem, 
and is therefore at the very basis of the modern labour contract. 
The standard of living for the working man—the quantity and quality 
of his food, shelter and clothing—is controlled by his average earnings, 
i.e., for periods covering terms of employment and unemployment, 
and not merely by his wage during some short busy period. This 
standard of living, in turn, affects his efficiency and the possibilities 
of his advancement. It also decides for large numbers whether 
the wife shall add to her other duties that of supplementing her 
husband’s wages. Even more significant, in the long run, is the sort 
of upbringing which it will enable the working man to give to his 

1 Adapted with permission from Joseph L. Cohen, Insurance against Unemploy¬ 
ment, pp. 35-36, 38-39. (P. S. King & Son, Ltd., 1921.) 


4 88 


THE WORKER IN MODERN ECONOMIC SOCIETY 


children. On it depends whether they are to go through school 
insufficiently nourished, and to be forced into some unskilled trade 
at an early age. 

Unemployment results in lowering the quality of the workers. 
The worse fed are the children of the unemployed, the less will they 
earn when they eventually engage in some occupation themselves, 
and the less able will they be in turn to provide for the needs of their 
children, and so on. Again, the less trained they are the less will 
they realize the importance of giving their children a good training 
and the less able will they be to provide adequately for so doing. 
These evils are cumulative. Another group of evils and deep influ¬ 
ences which are produced by unemployment result from its effect 
on trade unions. Periods of unemployment constitute a menace to 
trade unions; they result in a lowering of membership, a drain on the 
funds, and a weakening of their morale. Their power to bargain 
effectively is thus lessened. This disadvantage is cumulative in two 
ways: It lowers workmen’s wages; this lowers their efficiency as 
workers and consequently the normal value of their labour. And in 
addition it diminishes their efficiency as bargainers still more, and thus 
makes it more likely that they will sell their labour for even less than 
the employer could afford to pay them. 

The unemployed workmen and destitution .—A study of the reports 
during normal times of such societies as the Charity Organization 
Society and the United Hebrew Charities of New York show that from 
2 5 to 35 P er cent of those who apply to them for relief every year 
have been brought to their destitute condition primarily through 
lack of work, and this cause, investigation proves, is responsible also 
for frequent recourse to virtual loans from the corner grocery store 
and to pawnshops. Investigations in the large cities of Great Britain 
show similar results. 

c) EFFECTS OF CHRONIC UNDEREMPLOYMENT 1 

Such a situation [chronic underemployment] almost forces the 
worker to lead a hand-to-mouth existence. He hesitates to plan 
ahead, because he never knows whether he will be able to carry 
through his plans or not, for fear of an interruption of income. A 
premium is, therefore, placed on the lack of thrift. When the normal 
income returns after a famine period, it not unnaturally leads a 

1 Taken from Joseph H. Willits, Philadelphia Unemployment, pp. 51, 52. 
(Published by th6 Philadelphia Department of Public Works, 1915.) 


UNEMPLOYMENT 489 

family to spend extravagantly after the strain of pinching through a 
hard time. 

Perhaps the most serious industrial result of unemployment 
is its effect on the quality of the working people. It makes good 
workers bad. It turns workers who were capable and willing into men 
who are neither capable nor willing to hold a steady job if they could 
get one. As one man with whom I talked when he was out in front 
of a hosiery mill at the noon hour, said, “For six months before this 
month, we have been working from 8 to 3. When we came to go 
back to the old hours (7 to 5:30) it seemed at first as if we just couldn’t 
make ourselves get up an hour earlier and work two hours later.” 

The utter inability of the workers to understand or to change 
the situation breeds a fatalistic lack of hope that soon manifests 
itself in a lack of ambition and effort. The secretary of the National 
Lace Weavers’ Union says, “The lace industry has made more bums 
than any industry I know of. I have seen men go into the mills 
only to work an hour this morning or an hour this afternoon, so long 
that they are incapable of sustained effort. They lose their personal 
‘punch’ and often eventually lose their ability to discuss anything 
except how things are this week in this or that plant.” 

One of the usual ways by which such a depression leads to a 
debasing of the worker is by causing the skilled man to drift into an 
unskilled trade. When a man is out of work, he is very apt to “ take 
anything” that offers, whether it is a job in which he can utilize his 
skill or not. The very common result is that he is never able to 
“come back” to his own trade. His ability in his particular trade 
is sacrificed and he drifts into the already tremendously overcrowded 
class of unskilled men. 

5. TRADE UNION REACTION TO 
UNEMPLOYMENT (1919) 1 

The American unions have adopted certain policies which have 
as their object a solution of the problem of unemployment. Unions 
generally regard the amount of work which is to be done as a fixed 
quantity. Their chief concern, therefore, is the number of workmen 
among whom the employment is to be divided. Thus, the unions 
have been the strongest agitators for a restriction of immigration. 
In the same manner they appear to think that by the abolition of 

1 Adapted with permission from D. P. Smelser, Unemployment and American 
Trade Unions. (Johns Hopkins Press, 1919.) 


490 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the manufacture of goods by convict and child labor the per capita 
amount of work will be increased. In view of the existence of such 
union theories, it is not surprising that a great number of unions have 
placed restrictions upon the admission of workmen on their organiza¬ 
tions. 

Similarly a great part of the jurisdictional disputes among the 
unions is directly attributable to the “work fund” theory. Each 
union strives zealously to increase its jurisdiction, since the members 
expect thereby to increase their field of employment and thereby to 
increase the per capita amount of work for the members. 

The American unions have attempted to solve the problem of 
unemployment also by the adoption of policies which, it was thought, 
would tend either to increase the total amount of employment or to 
distribute the employment over a greater number of their members. 
Such policies are (i) restriction of output, (2) shortening of the 
normal day, and (3) regulation of overtime. 


UNEMPLOYMENT 


491 


6 . CAUSES OF UNEMPLOYMENT 

a) INDUSTRIAL CAUSES AT WORK 1 


Regular Causes of Unemploy¬ 
ment 


V 


Casual nature of certain trades 
Repair of works 
Climatic changes 
Habitual changes of fashion 
Reserves of labour round industrial 
establishments 

Lack of proper organization in factories 
resulting in anarchic methods of 
hiring and firing workmen 


Uncertainties 

in 

Political 

Life 


War 

I Changes in Legislation bearing 
economic activities 
Irregularities of public works 


on 


Irregular 
Causes of 
Unemploy¬ 
ment 


Variations 

in 

Nature 


Famines: Agricultural or other dis¬ 
asters 

Earthquakes 

k Storms at sea (affecting dock labour) 


Variations 
in the 

Comparative 

Attractiveness 

of 

Investments 


Invention of new machinery 
Improvement in industrial organization 
Removal or displacement of an in¬ 
dustry 

Change of routes, of means of com¬ 
munication, and of tariffs 
Alteration of waterways to the interior 
Long time changes of fashion 
Sudden immigration of workmen: a 
temporary flow of workmen towards 
a given industry or towards a given 
centre 

Involuntary closing of factories 
Changes in money value. Price fluc¬ 
tuations 

Abuses of competition and speculation 
Sweating system and abuse of employ¬ 
ment of women and children 
Excessive prolongation of the hours of 
labour 

A crisis abroad or a change in the 
market of some other country 
Changes in foreign competition and 
production 


1 Adapted with permission from Joseph L. Cohen, Insurance against Unemploy- 
ment , p. 30. (P. S. King & Son, Ltd.,. 1921.) 












49 2 


THE WORKER IN MODERN ECONOMIC SOCIETY 


b) THE RESERVE OE LABOUR 1 

The trade union returns have yet one lesson to teach. The 
unemployed percentage, however it may fluctuate, never fluctuates 
down to zero. 

The irreducible minimum of unemployment does not appear only 
in the general percentage for all trades taken together: it is shown also 
by each trade or group of trades taken separately. 

Suppose that ten centres of casual employment—say ten similar 
wharves—each employ from 50 to 100 men on any one day, so that 
each considered separately requires a regular staff of 50 and a “reserve” 
of 50 more. In so far as the variations of work depend upon general 
causes, affecting all the wharves simultaneously and similarly, the 
busy and slack times respectively will tend to coincide and the varia¬ 
tions in the total work to reproduce proportionately those of each 
separate wharf. In so far, however, as the variations at different 
wharves are unconnected, they will, in the total of men required at 
all the ten from day to day, tend to neutralise one another, because 
a busy time at some wharves will coincide with a slack time at others. 
Suppose that in fact the numbers employed at the whole ten from day 
to day range from a minimum of 700 to a maximum of 800. These 
daily numbers, whatever they are, will give the numbers of “regular” 
and “reserve” labourers who may theoretically find work at the whole 
ten wharves taken together. They must be taken as unalterable, 
determined solely by the necessary irregularities of trade and tide. 
They would presumably be the actual numbers employed supposing 
all the ten were amalgamated into a single wharf having the same 
mass and flow of custom. But so long as the wharves remain distinct, 
the number of individuals who will practically be required to do the 
same work is affected also by quite a different set of considerations. 
It is clear that if each separate wharf forms an absolutely distinct 
labour market so that no man works at more than one, then, however 
the variations of business neutralise one another, the number of indi¬ 
viduals required to do the work will be 100 for each wharf of 1,000 
in all. It is clear, on the other hand, that if the whole ten form a 
single labour market within which labour is absolutely fluid, then the 
full number of individuals required will coincide with the maximum 
of 800 employed on any one day. The total number of men practically 
required to do the work without delay (and by consequence the number 
of reserve labourers) is, in fact, increased by every barrier to free 

1 Adapted with permission from W. H. Beveridge, Unemployment , pp. 68-81. 
(Longmans, Green & Co., 1910.) 


UNEMPLOYMENT 


493 


movement from one wharf to another, and can be correspondingly 
decreased by everything tending to the organization of the whole 
ten into a single labour market. The greatest barrier to free move¬ 
ment in any area is ignorance among the men as to the demand for 
labour in different directions; every means taken to remove this 
ignorance enables the work of any area to be done with a smaller 
reserve of labour. But the general distribution of the most accurate 
information as to the amount of work at each centre is only a first 
step. Even if every man knows exactly how many men will be 
wanted next day at each wharf, this will not of itself (i.e., unless each 
knows also exactly how his fellows will act) prevent too many indi¬ 
viduals from applying at one wharf and (perhaps) too few at another. 
If it is desired to do the work with the smallest possible reserve of 
labour, some means must be adopted for directing the right number 
of specified individuals to each wharf from some one centre or 
exchange. 

The foregoing arguments may now be summarised. For the work 
of a group of casual employers a certain theoretically determinable 
number of men may be regarded as necessary; the number will be 
fixed by conditions of trade which must be taken for the present as 
unalterable. And, in so far as these trade conditions involve rapid 
and irregular variations of work within fairly definable limits, a part 
of this total number will have the character of an inevitable reserve 
of partially employed labour. But the actual number of men by 
whom the work is done, and its relation to the theoretically necessary 
number, will be affected also by another set of considerations, quite 
unconnected with the total volume of work or the unalterable condi¬ 
tions of trade. In the first place, every hindrance to the perfect 
fluidity of labour from centre to centre will swell the actual number of 
individuals doing the work by an amount representing the degree of 
friction. To return to the numerical instance, the work of ten 
wharves, which, if they had become for purposes of employment one 
wharf, might have been done by 800 men, would, with a certain 
degree of friction, require the services of 900. In that case there 
would, even when the wharves, as a whole, were busiest, be at least 
100 men out of work. 

Those men who will in practice- be added to the? theoretical maxi¬ 
mum for any area by friction between its separate centres, though the 
product of disorganization are true reserve of labour without which, 
given that degree of disorganization and friction, the industry could 
not be carried on. 


494 


THE WORKER IN MODERN ECONOMIC SOCIETY 


In the total reserve of labour for any occupation it is thus possible 
to distinguish three elements. There is first the body of men repre¬ 
senting the fluctuations in the volume of work to be done at all 
centres of employment taken together. In the numerical instance 
given this consists of the ioo men making the difference between the 
700 engaged on the day when the ten wharves collectively are slackest 
and the 800 engaged on the day when the ten wharves collectively 
are busiest. These men are required by the conditions of the trade 
as a whole. There is, second, the body of men required by the fact 
that, owing to distance, ignorance or custom, the supply of labour 
cannot move with perfect freedom and instantaneously from any 
one centre of employment to any other, and that therefore separate 
centres, to meet their fluctuations of work, must to some extent keep 
separate reserves. These men represent the friction of the labour 
market. In the numerical instance given they are the 100 men 
between the 800 required on the busiest day for the wharves col¬ 
lectively and the 900 required because the men just dismissed from 
one wharf which is slack are not necessarily or immediately available 
for work at any other which happens to be busy. 

c) SOME CONSTANT CAUSES OF UNEMPLOYMENT 1 

Machinery and new processes .—That the discovery of new processes 
of manufacture are causing men to be displaced from industry at 
every step is so commonplace that it is likely to be overlooked. 
Ordinarily we should expect the number of wage-earners employed 
in our industries to increase with the growth of the population. Yet 
in the five years between the manufacturing censuses of 1900 and 
1905, out of 61 leading industries in the State of New York, nine 
suffered actual decreases in the number of their employees which 
might be traced to the introduction of machinery. The decreases 
in the number of wage-earners are accompanied by an increase in 
the value of machinery, tools and implements employed. 

In some industries the contrast is striking. For instance the 
manufacture of men’s furnishing goods, in which New York ranks 
first among the states, the value of machinery used increased almost 
17 per cent, while the number of wage-earners decreased 23 per cent. 
In the leather gldves and mittens industry the value of machinery 
increased over 17 per cent, while the number of employees decreased 

1 Taken from William L. Leiserson, Unemployment in the State of New York. 
(Columbia University, 1911.) 


UNEMPLOYMENT 


495 


43 per cent. A smaller working force often goes hand in hand with 
expansion of industry. Comparing the census figures of 1900 with 
that in 1890, we find that ten of the leading industries in this 
state showed an increased amount of capital invested accompanied 
by a decreased number of workers. In the men’s clothing industry, 
for example, capital increased from $46,000,000 to $51,000,000 or 
11 per cent, the value of products increased from $96,^00,000 to 
$126,000,000 or 30 per cent, while during the same decade the wage- 
earners employed fell from 54,000 to 41,300, over 13 per cent. 
Shirts, worsted goods, carpets, slaughtering and cheese, butter and 
condensed milk show similar changes. 

There is no doubt that while some trades are thus taken away by 
machinery and changed processes, others are developing, but that is 
of little help to the unemployed man who does not know where to 
look for the new work, and who has not the training for it if he finds it. 

f 

a) THE TEXTILE INDUSTRY 1 

Of Philadelphia industries, the textile and clothing manufactories 
show chronic unemployment and part time employment at their 
worst. 

It is worth while to point out two general conditions that especially 
contribute to permanent unemployment in the textile industries. 
First is the constant shift of demand from one type of textile fabric 
to another. The industries that have been built up to supply products 
no longer demanded by the market must gradually die out, or readjust 
themselves to a new demand. During the decadence of these indus¬ 
tries, the number of workers that have been attiacted to the industry, 
is greater than can now be kept busy. These employees hesitate 
to leave the industry for some other probably uncertain and unaccus¬ 
tomed line; conditions may improve in their own trade. Moreover, 
under existing circumstances in industrial plants, they feel that the 
skill acquired by years of work in their own trade will be sacrificed, 
and many are too old to risk the change. An excess of workers is, 
therefore, characteristic of a declining industry. A long period of 
part time and of unemployment, often running into years, results. 
A letter from one of the editors of the Textile Manufacturers’ Journal 
shows the frequency of the rise and fall in textile industry: 

1 Taken from J. H. Willits, “Chronic Unemployment in Relation to Techno¬ 
logical Changes and to Fashion,” Philadelphia Unemployment. (Philadelphia 
Department of Public Works, 1915.) 


496 THE WORKER IN MODERN ECONOMIC SOCIETY 


To take up one item that you speak of in your letter, viz., the fact that 
carpets have given way to rugs, it must also be remembered that the wool 
rug industry has suffered by the competition of grass and other fiber rugs. 
In connection with the increase in the demand for silk and light hosiery 
would say that the same tendency was evident in the case of neckties, 
where artificial silk was largely used. This, however, has again almost 
disappeared. 

In the ftiatter of knit goods we find that a great many changes have 
taken place which are revolutionary. For instance, there have been some 
radical alterations in outer garments, such as sweaters. These did take the 
place of overcoats with the general public in a very great degree, but in 
turn have been supplanted in many instances by the mackinaw. These 
again in turn, as far as women are concerned, have given place to the pure 
silk and artificial silk sweater which is now in increasing demand. 

A second condition that contributes to irregularity in employment, 
and is very much more important now than it was twenty years ago, 
is the growing tendency—especially in hosiery, higher grade carpets 
and fancy dress goods—to manufacture solely “on orders.” Formerly 
a manufacturer produced standard makes of his particular line and 
simply piled up stock in his warehouse in the off-season. To-day 
manufacturers make, as a rule, very little to stock and run chiefly 
on orders. The result is that when orders come in thick and fast 
at the proper season, there is a period of feverish activity until they 
are delivered, and then probably a long period of total or partial 
unemployment. The experience of one man (a. warper) represents a 
situation prevailing in a large percentage of the textile factories. 
“The second week after I was employed at .... I was called on 
to work overtime four nights till 9 o’clock at night. On Satur¬ 
day of that week, I, with four others, was laid off for lack of 
work.” 

Lace and lace curtains .—The last ten years has witnessed a steady 
increase in unemployment in the lace, and particularly in the lace 
curtain business. There is no longer the demand for the lace curtains 
which fifteen years ago adorned parlor and bedroom windows alike. 
Consequently the lace mills have rarely worked full time during the 
last six years. Since both the employers and the lace weavers’ 
union attempt to distribute what work there is among as many workers 
as possible rather than assist a portion of the employees to new trades, 
permanent part time employment results. 


UNEMPLOYMENT 


497 


7. LACK OF ELASTICITY OF WORKING 

HOURS 1 

Elasticity of working hours means that the reserve power to meet 
growth in the demand for labour should, up to a certain point, be found 
rather in the ability of the men engaged to work longer, than in the 
presence of unemployed men standing ready to be employed. Con¬ 
versely it means that the loss of employment due to diminution of 
the demand should by a reduction of hours for all be spread over the 
whole body of men instead of being concentrated, by complete dis¬ 
missal, upon a few. 

This method of meeting fluctuations is, of course, by no means 
unfamiliar. It is found very completely developed in coal-mining, 
where, according to the state of trade, the pits remain open for varying 
numbers of days each week. The actual fluctuations to be met are 
very considerable. Thus for 1895, 1900, 1905 and 1907 respectively 
the average number of days worked at all the coal-mines making 
returns were 4.74, 5.47, 5.03 and 5.51 respectively. In other words, 
they were in turn 79, 91, 84 and 92 per cent of the theoretical maxi¬ 
mum of six days a week. The fluctuations, however, being met in the 
manner indicated, involve hardly any dismissal of individual workmen 
and therfore substantially no acute distress. 

The more general application of this method is obviously to be 
desired. It is above all suited to those definite and general contrac¬ 
tions in the demand for labour which have been considered under the 
title of cyclical fluctuation. The difference between a ten hours’ 
and a nine hours’ day, for instance, would, other things being equal, 
carry off a depression of 10 per cent. The difference between ten and 
eight hours would carry off a depression of 20 per cent. Except in 
one or two industries depressions hardly ever reach this magnitude. 
As measured by the general unemployed percentage the deepest 
depression ever recorded—that of 1879—represented a fall of only 
10 per cent from the most prosperous of the years before. 

It is not, indeed, suggested that a general eight hours’ or six 
hours’ day in slack times should be imposed by direct legislation. 
The matter is certainly not now one for legislation, even if it ever 
can be. It is one for the association of employers acting in agree¬ 
ment or in sympathy with the associations of workmen, and it is a 
matter for each trade more or less by itself. It will be found probably 

1 Adapted with permission from W. H. Beveridge, Unemployment , pp. 219-29. 
(Longmans, Green & Co., 1910.) 


498 THE WORKER IN MODERN ECONOMIC SOCIETY 


that in some trades organised short time is impracticable; in others 
that it would increase merely the length of the job, not the numbers 
whom it was possible to employ; in others that it would add exces¬ 
sively to the cost of production. All these considerations must make 
procedure tentative. Yet there can be little doubt that a large field 
for reform in this direction lies open if once the principle of elasticity 
in working hours be accepted by the great industrial associations. 

8. UNEMPLOYMENT AND CREDIT 1 

The credit problem is our biggest labor problem, because it lies at 
the bottom of the question of unemployment and that question is the 
point of bitterest contact between capital and labor today. One 
might even say that socialism and trade unionism are both founded 
on the fear of unemployment. 

The banking system, which is the center of the credit system, 
more than the business man who is the actual employer, can stabilize 
industry, and, in stabilizing industry, stabilize employment. The 
difficulty is that no one individual can do it alone; no bank can do it 
by itself; no one business man can do it by himself; it is a collective 
responsibility and collective action is necessary. If one person is 
trying to stabilize his industry by not over-expanding and not taking 
too many rush orders, he simply knows that his competitors will 
get his business. But if all the business men who are competing 
with each other know that the banks are treating the others in the 
same way, then stabilization might be expected to work. So that the 
inducement to stabilize employment in order that it may be really 
effective must not only take the example of those manufacturers who 
have pioneered the way themselves, but must interest the entire bank¬ 
ing system of the state or nation in the plan. 

Now the Huber bill proposes that when an employer lays off a 
man, if the man has had six months’ work in the state during the year, 
the employer shall pay him a dollar a day for a period of thirteen weeks, 
and pay the state ten cents a day additional toward expenses of 
administration. This creates a possible liability of about $90, added 
to every man taken on in case he is laid off through no fault of his own, 
but simply through fault of the management. It means an added 
liability which the employer assumes when he hires a workman, so 
that, under such circumstances, it should be expected that when an 

1 Adapted with permission from John R. Commons, The Survey (October 1, 
1921), pp. 4, 6. (Published by Survey Association.) 


UNEMPLOYMENT 


499 


employer wants to expand, and he ordinarily cannot expand except 
by getting credit, he will go to the bank for additional credit and the 
banker will necessarily inquire as to what security he has that, at the 
end of these rush orders, he will be able to continue the employment 
or pay that possible $90. In other words, the business man and the 
banker together are the controllers of credit, and it is the control of 
credit which can stabilize business. The over-expansion of credit 
is the cause of unemployment, and to prevent the over-expansion of 
credit you place an insurance liability on the business man against 
the day when he lays off the workmen. 

9. IMMIGRATION AND UNEMPLOYMENT 1 

Whenever there is a considerable amount of unemployment in 
the United States, immigration automatically falls off, but by many 
it is not regarded as a sufficient check. 

A large proportion of immigrants to this country are unskilled 
laborers or persons without a definite occupation. The following 


TABLE LXXIX 

Number and Occupations of Immigrant Aliens 


Occupations 

Number, 

Percentage of Total 

1920 

1920 

1910-1914 

Professional. 

12,442 

69,967 

15,257 

12,192 

8i,732 

37,197 

28,081 

2.9 

1. 2 

Skilled. 

16 . 5 

14-5 

24-3 

1 . 1 

Farm laborers. 

5 • 5 

Farmers. 

2.8 

Laborers. 

19.0 

8.7 

18.4 

Servants. 

11 . 7 

Other OccuDations. 

6.4 

2.7 

No occupation (including women and children) 

173,133 

40.3 

26.2 

Total. 

430,001 

100.0 

100.0 




table classifies the arrivals to this country, by occupation, for the year 
1920 with comparative figures for 1910-1914. 

There are two major reasons why the influx of large numbers of 
unskilled workers, and to some extent of the skilled, inevitably tends 
to increase the unemployment situation: (1) the new arrivals largely 
concentrate in the large industrial centers where the employment 
situation is most acute; (2) unskilled immigrant labor, as a class, is, 

1 Adapted with permission from Waste in Industry , pp. 298-300. (Federated 
American Engineering Societies, Washington, D.C., 1921.) 
























500 THE WORKER IN MODERN ECONOMIC SOCIETY 

for obvious reasons, more subject than the native to the hazard of 
unemployment or irregular employment. 

The number of immigrants and emigrants for the io-year period 
is shown in the following table: 


TABLE LXXX 

Total Alien Immigration and Emigra¬ 
tion, Fiscal Years 191c to 1920 


Year 

Immigrant 

Emigrant 

1910. 

1,041,570 

878,587 

838,172 

1,197,892 

I,218,480 
326,700 
298,826 
295,403 

IIO,6l8 

141,132 

430,001 

202,436 

295,666 

333,262 

308,190 

303,338 

204,074 

129,765 

66,277 

94,585 

123,522 

288,315 

1911. 

1912. 

IQI3. 

IQI4. 

IQI C. 

1916. 

1017.;. 

1918. 

IQIQ. 

1020. 



Recent figures, beginning July 1, 1920, indicate a large increase of 
immigration even over the pre-war period. 

The future of immigration to this country no man can safely 
predict. Whatever measures of restriction are adopted by Congress 
and European Governments, it is likely that at most times enough 
immigrants will reach our shores to affect the question of employment. 
The outstanding lack at the present time is competent distributing 
agencies which will place the newcomers to the best advantage for 
employment, and particularly to help them to agricultural pursuits 
so that they may not swell the labor surplus at industrial centers. 

10. SUGGESTED MODES OF ACTION 

a) UNEMPLOYMENT AND THE BUSINESS CYCLE 1 

In any analysis of our productive processes we can make a broad 
distinction between our additions to national plant and equipment, 
such as houses, railroads, manufacturers, and tools, on one hand, 
and the consumable goods which we produce on the other. At the 
present time we increase our activities in both of these directions at 
the same time, and in their competition with each other we produce 
our booms. 


1 Adapted from ibid. 





















UNEMPLOYMENT 


5°i 


The ebb and flow in the demand for consumable goods may not be 
subject to direct control; but, on the other hand, it should be possible 
in some measure to control the expansion of the national plant and 
equipment. If all branches of our public works and the construction 
work of our public utilities—the railways, the telephones, etc.—could 
systematically put aside financial reserves to be provided in times of 
prosperity for the deliberate purpose of improvement and expansion 
in times of depressions, we would not only greatly decrease the depth 
of depressions but we would at the same time diminish the height of 
booms. We would in fact abolish acute unemployment and wasteful 
extravagance, for a rough calculation indicates that if we maintain 
a reserve of but io per cent of our average annual construction for 
this purpose we could almost iron out the fluctuations in employment. 
Nor is this plan financially impracticable. Under it our plant and 
equipment would be built in times of lower costs than is now the case 
when the contractor competes with consumable goods in over-bidding 
for both material and labor. 

The subject is one of most profound national importance and is 
at least one direction in which a balance wheel could be erected that 
would tend to maintain an even level of employment and business. 
The action of the states of Pennsylvania and California in making a 
provision for the control of public works to this end is one of the most 
interesting and important economic experiments in the country. 

Data needed to direct the control .—In order to guide such a policy 
it is fundamental that an accurate statistical service be organized. 

Such statistical service would in itself contribute to minimizing 
the peaks and valleys in the economic curve. The same warnings 
that would enable intelligent action on the part of public authorities 
and those who control large enterprises in guidance as to the periods 
in which construction should be deferred or should be initiated would 
also serve as a warning to the commercial public and would tend in 
themselves to effect the ends desired. 

h) LONG-RANGE PLANNING OE PUBLIC WORKS 1 

When public works are done in greatest volume during periods 
of active industry the same men and material are being competed 
for by both public and private employers. The inevitable result is 

1 Taken from Report of the President's Conference on Unemployment, October, 
1921, pp. 96-106; Report of Committee on Public Works; Adopted by the Con¬ 
ference October 13, 1921. 


5° 2 


THE WORKER IN MODERN ECONOMIC SOCIETY 


to raise the height of the crest of the wave of cyclical business inflation 
and to cause a greater crash when the heightened wave breaks, as it 
always does. 

In a growing country like the United States the aggregate volume 
of public works of cities, counties, states, and of the federal government 
is so great that if a larger proportion were executed in years of depres¬ 
sion than in years of active industry a powerful stabilizing influence 
would be exerted. In the past, however, public works officials have 
felt poor when business was depressed around them and conversely 
have often executed their chief undertakings when the contagious 
enthusiasm of captains of industry and of the general public has 
hailed a period of prosperity at hand. 

A large percentage of all public work is done out of the proceeds 
of bond issues to be paid off out of annual taxes received during 
subsequent decades. Not only can municipalities borrow more 
favorably than private borrowers in bad times, but by timing their 
public work during periods of inactive business and relative unemploy¬ 
ment they can also secure a more plentiful and regular supply of mate¬ 
rials and labor as an important economy in construction. When, 
in addition to these already cogent reasons, it is remembered that 
municipalities and their constituent citizens do in fact assume and 
bear the cost of destitution within their gates, any measure which 
tends to steady employment of their citizens in bad times and good 
will be some policy from whatever point of view considered. 

The leadership of the federal government in expanding its public 
works during periods of depression and contracting execution in periods 
of active industry requires no great change from existing procedure. 
Already the executing agency enjoys great latitude as to the period 
in which the appropriations may be spent. The remaining step is 
to choose the period of intensive execution to synchronize with major 
periods of industrial depression. 

Certain works of the federal government, such as reclamation, 
flood prevention, river and harbor work, roads and public buildings, 
are peculiarly suited for consideration as large undertakings covering 
a long period and capable of elasticity of execution to synchronize 
with cycles of business depression. The machinery legislated by the 
states of Pennsylvania and California to plan in advance for the 
expansion of public works during periods of depression are examples 
of present tendencies. Available estimates show that if 20 per cent 
of ordinary necessary public works were deferred each year and the 


UNEMPLOYMENT 


5°3 


accumulation executed in a year of depression occurring once in io 
years, the lifting power of public works would be at least one-third 
the dead weight of such a depression as the present. That the indirect 
effect would be even greater is indicated by the attached charts. 

Excerpts from Report of Economic Advisory Committee on 
Emergency Public Works, September 26, 1921: 

1. The best remedy for unemployment is employment. 

2. Direct employment is given by public works. 

3. Indirect employment is given in the manufacture of the 
materials needed. 

4. The wages paid to those directly and indirectly employed 
create a demand for other commodities which require the employment 
of new groups to produce (see charts attached). Thus public works 
assist in reviving industry in general. 

5. Public works will serve as a partial substitute for private relief 
and charity. 

Cautions. —1. Public works must be on a “commercial” basis, 
not a “relief” basis, otherwise waste will result. On a “commercial” 
basis men fit for the work are engaged at usual rates and wages and 
unfit workers are discharged. On the “relief” basis the workers are 
chosen primarily because they are in need and retained whether fit 
or not. 

2. Only necessary public works should be undertaken which would 
ordinarily be executed at some future time. 

On deferring specific public works .—There is a serious apparent 
objection to the policy of deferring needed public works during a 
period of seven to nine years in order to concentrate a larger amount 
than normal in a depression year. On examination it will be found 
that no specific piece of public work will be deferred for any such 
length of time. This may be illustrated as follows: Suppose that 
normally the public-works construction of some given community 
amounts to $100,000 a year. The community is asked to defer 
about 20 per cent of this in normal years. The first year, public 
works to cost $20,000 are deferred. The construction of this particular 
public works will not, however, be deferred until the depression year. 
It will be constructed in the second year, and newly authoiized public 
works to cost $40,000 will be deferred from the second into the third; 
to cost $60,000 will be deferred from the third to the fourth year, 
and so on. Only after the fifth year would any specific public-works 
construction be deferred more than one year. The work concentrated 


5°4 


THE WORKER IN MODERN ECONOMIC SOCIETY 


in the tenth year would be deferred from no earlier year than the 
eighth. 

C) EMPLOYMENT EXCHANGES 1 

State employment exchanges .—Previous to the world-war a number 
of states had established systems of employment exchanges, but 
their work was limited in scope. Dr. Edward T. Devine reported 
that the Ohio system was the only one found to be adequately 
equipped, “New York, Massachusetts, Wisconsin, and a few other 
states—ten at the outside—had what might be called systems of free 
public employment bureaus. Twenty-six states had passed laws of 
some kind authorizing their establishment.” 

At the beginning of 1919, there were twenty states which con¬ 
tributed to the support of public employment offices. The largest 
amount appropriated was $253,000; the smallest $1,400; the total 
amount, $785,254. In 1919, New York, Illinois, Pennsylvania, 
California, and Michigan conducted ten or more offices. In all there 
were 129. 

In 1920, the financial support to state employment offices was 
materially increased. The total appropriations amounted to nearly 
$300,000 more than in 1919. The number of offices decreased by ten, 
consolidations having been made in some states, which at the same time 
increased appropriations. 

Criticism of state systems .—Among the criticisms directed against 
state employment systems is their liability to political control; lack 
of adequately trained personnel due to shortage of funds; and inability 
to meet interstate needs, or even to any great extent those within 
the state. 

The difficulty of state offices in making interstate placement is 
twofold. First, without a general employment system, they lack 
information. There may be unemployed carpenters in one state 
and a demand for them in the next, but if employment records are 
not exchanged the two state offices are equally powerless to place 
the workers or supply the employers. Second, there is a natural 
tendency to oppose the spending of state funds for placements outside 
the state. 

Semi-public .—The second group of employment exchanges in the 
United States to be considered are the semi-public, for example, the 
philanthropic societies making the placement of workers a part of 

1 Adapted with permission from Waste in Industry, pp. 279-82. (Federated 
American Engineering Societies, Washington, D.C., 1921.) 


UNEMPLOYMENT 


505 


their activities. Organizations like the Y.M.C.A., the Y.W.C.A., 
the Knights of Columbus, and some of the Jewish societies have done 
much in this direction. Their service is either free or at least the fees 
are nominal in amount. Their effectiveness, however, is limited to 
comparatively small groups, as some workers avoid them because 
they regard the service as a charity, and because of religious and other 
reasons. 

Private .—Private agencies comprise the third group of employ¬ 
ment exchanges in the United States. 

a) Commercial employment agencies: There were between 4,000 
and 5,000 commercial employment agencies in the United States at 
the beginning of 1919. 

The basic defect in commercial employment agencies as a means of 
reducing unemployment is that their profits depend on the number, 
not the permanence, of the placements made. Hence it pays the 
agency to entice men from one place to another and to stimulate 
turnover rather than to reduce it. 

Much evidence has been collected to prove the abuses carried 
on by private agencies. Typical practices are the misrepresentation 
of wages and working conditions, extortionate fees, splitting fees with 
foremen to secure frequent discharges and opportunities for new place¬ 
ments, and the shipment of men to distant points where no jobs 
are really available. The New York City Commission of Licenses 
investigated 1,932 complaints against commercial employment 
agencies in one year, ordered the refunding of over $3,000 to clients 
of these bureaus, revoked 13 licenses, and secured the conviction of 9 
employment agents. Such a record is an index of the abuses which 
obtain in the country at large. 

d) PUBLIC EMPLOYMENT EXCHANGES IN THE UNITED STATES 

Federal .—Up to the end of 1917 there were no employment offices 
in the United States organized on a national scale. Some were 
administered by the Immigration Department, others were under 
state control, and there were many private agencies, when industry 
began to fill war orders. 

To meet this emergency the U.S. Employment Service was 
organized with the Department of Labor, and all employment work 
was transferred to it from the Bureau of Immigration. 

In addition to the paid personnel of the Service, there were 
gradually developed volunteer state advisory boards, and community 


506 THE WORKER IN MODERN ECONOMIC SOCIETY 


labor boards on which the federal government, employers, workers 
and women were represented. These volunteer boards were effective 
in determining policies and especially in winning employers to regard 
the Service more favorably. 

Subsequent to October i, 1919, the employment offices were 
under state operation, with federal co-operation. A general view of 
its activities through the three-year period from 1917 to 1920 is offered 
by the following figures. 

TABLE LXXXI 

Activities of the U.S. Employment Service, 1917-20 


Fiscal Year Ending June 30 

Help Wanted 

Registrations 

Number 

Referred 

Number Re¬ 
ported Placed 

oc 

h- 

c 

H 

2 , 993,798 

10,701,447 

2 , 589,145 

2 , 381,392 

6,166,447 

3,165,559 

2,112,139 

5 , 646,353 

2,458,809 

1,890,593 

4,267,350 

2,020,252 

IQIQ. 

1920. 



After the war financial support was practically withdrawn, and 
the funds appropriated last year were $400,000 instead of the 
$4,600,000 requested of Congress. At present only a skeleton 
service is maintained. 

11. THE EMPLOYER AND UNEMPLOYMENT 

COMPENSATION 1 

Clearly it is the duty of the community to take every possible step 
to steady the labor market and to provide work for the unemployed 
in times of trade depression, on satisfactory lines. 

But when the utmost has been done in this direction there will 
still remain a margin of men and women for whom work cannot be 
found. What is to happen to them? I suggest that if, in order to 
function efficiently, industry retains a reserve of workers to meet its 
varying demands, it should make adequate provision for the mainte¬ 
nance of that reserve when it cannot be absorbed. If employers, as 
a class, fail to acknowledge this responsibility they are, it seems to 
me, giving away one of the main defences of the existing system, 
under which the capitalist asks the workers to unite with him in 
undertaking an industrial enterprise. What he says to them is 
practically this: “ If you will provide labor, I will provide the necessary 

Adapted with permission from B. Seebohm Rowntree, “Unemployment 
Compensation an Aid to Economic Security,” American Labor Legislation Review , 
Vol. XI (December, 1921). 

















UNEMPLOYMENT 


5°7 

capita]. The first claim upon the product of our joint enterprise 
shall be the payment to you week by week of agreed wages. After 
that the other charges of the industry must be met, and then if there 
is anything over I will take it as a recompense for the service I render 
in providing the capital. Since I take the risks of industry, I am 
justified in taking the profits.” 

There is a great deal to be said for an arrangement of this kind, but 
at present one of the principal risks attached to industry is liability 
to find one’s self unable to earn a livelihood, through involuntary 
unemployment due to trade depression. If the capitalist leaves the 
worker to face that risk unaided, he abandons the ground on which 
he justified himself in taking all the profits, and his claim to do this 
can no longer be defended. 

It is not unreasonable of the workers to demand that, just as a 
well administered firm sets aside capital reserve in periods of prosperity 
so that it may equalize dividends over good and bad years, so an 
industry or a firm should establish a wages equalization fund, which 
will enable it to pay part wages to its reserve of workers during the 
periods in which their services are not needed. 

12. UNEMPLOYMENT INSURANCE 1 

When all has been done that can be done to organise the labour 
market, many further measures will still be needed. The problem of 
cyclical fluctuation will not have been touched directly at all. The 
problem of seasonal fluctuations will have been affected only to a small 
extent by the extended and organised use of subsidiary trades. The 
incalculable changes and irregularities of economic conditions will 
still make nearly all men insecure. No amount of Labor Exchanges 
can guarantee that every man falling out of one job shall at once 
find another job suited to his powers. 

The need for further measures must be fully recognised. The 
consideration of those measures in this chapter may, however, be 
premised by two general considerations. First, though the organiza¬ 
tion of the labour market can have no direct influence upon cyclical 
fluctuation and certain other factors in unemployment, it may have, 
and indeed is certain to have, a very important indirect influence on 
the degree and volume of distress involved in these factors. De- 
casualisation will reconstruct the whole conditions of life in the 

1 Adapted with permission from W. H. Beveridge, Unemployment , pp. 219-29. 
(Longmans, Green & Co., 1910.) 


508 the worker in modern economic society 


lowest ranks of industry, sifting out for remedial treatment a certain 
number who are unemployable, and forcing up the level of all the rest. 
It will replace the casual class—always on the verge of distress, 
always without reserves for an emergency—by a class for whom the 
words foresight, organisation and thrift may represent not a mockery 
but a reality. Exceptional depression of trade, therefore, will far 
less certainly mean acute or immediate distress. Second, unemploy¬ 
ment itself must be accepted as in some degree inevitable. The 
influence of seasons will survive any change of human institutions. 
Cyclical fluctuation will survive any change which does not threaten 
the very principles of industrial growth, and is in any case quite 
certain to recur for many decades to come. Changes of structure 
also are inevitable unless industry is to become stereotyped and 
unprogressive. Finally and quite generally, so long as the direct 
demand for labour remains distributed between and dependent upon 
the fortunes of a host of individual employers, the demand may in 
certain times and places fall out of perfect adjustment to the supply; 
the vicissitudes of the numberless separate groups of producers means 
insecurity for the individuals composing those groups. They are 
constantly passing from one group to another; it will always be 
possible for an individual to fall out of one group without immediately 
finding another to receive him. To a very large extent therefore it 
must suffice to aim at preventing, not unemployment itself, but the 
distress which it now involves. 

13. UNEMPLOYMENT RELIEF MEASURES 
IN GREAT BRITAIN 

a) THE BRITISH UNEMPLOYMENT INSURANCE ACT 1 

In 1920 all parties in the State, as well as practically all employers 
and employees, were ready for a national scheme covering the whole 
of the industrial population. The Act passed provides that all 
persons of the age of sixteen and upwards who are employed under a 
contract of service or apprenticeship will be compulsorily insured 
against unemployment save persons employed in agricultural work, 
including horticulture and forestry, private domestic servants, out¬ 
workers, Government and public corporation employees who are 
employed continuously, and agents paid by commission or fees or a 

1 Adapted with permission from Joseph L. Cohen, Insurance against Unemploy¬ 
ment, pp. 205, 206, 211-13. (P. S. King and Son, Ltd. London, 1921.) 


UNEMPLOYMENT 


5°9 


share in the profit. About twelve and a quarter million people were 
compulsorily insured. 

The State contributes annually, from money granted by Parlia¬ 
ment, an amount equal to about one-third of the total contributions 
of employers and workmen. The contributions from employers, the 
workmen, and the State together form the Unemployment Fund from 
which benefits are paid. This fund is controlled and managed by 
the Ministry of Labour. 

Contributions .—Contributions are levied at a uniform rate for all 
workmen. There is an obvious objection to having the payment of 
equal contributions by people subject to different risks. The amount 
of unemployment varies with the occupation, the age, and probably 
with the wage of workmen. It was actually planned at first to meet 
this variation through differences in the rate of benefits, but the lack 
of adequate statistical data made this difficult. Women and boys 
and girls under eighteen pay a different rate of contribution from 
men. 

Contributions of employers and workers are paid in the first 
instance by the employers, who are required to purchase and affix 
to the workmen’s “unemployment books” unemployment insurance 
stamps to the value of the joint contributions of employer and work¬ 
man. After having fixed the stamps the employer may deduct from 
the workman’s wages one-half of the value of such stamps. No con¬ 
tributions are required while the workman is out of work. 

The unemployment insurance stamps are obtainable at post- 

offices. No employer may employ a workman in one of the insured 

* 

trades who does not have an insurance book. The adoption of this 
method of collecting the contributions not only saves time, but also 
dispenses with the need of an army of agents, or of some alternative 
agency which would otherwise be necessary to collect the contribu¬ 
tions of over twelve and a half million members. 

Since July 4, 1921, the weekly rates of contributions have been: 


TABLE LXXXII 



Employer 

Employed 

State 

Men. 

8 d. 

7 d. 

3 ld. 

Women. 

7 d. 

6 d. 

3 \d. 

Boys. 

4 d. 

3 K 

1-7/8L 

Girls. 

Z\d. 

3d. 

1-5/8L 















THE WORKER IN MODERN ECONOMIC SOCIETY 


5 10 


Benefits .—From March 3, 1921, the weekly rate of unemployment 


benefit has been: 

Men. 155. 

Women. 12s. 

Boys (between the ages of 16 and 18). 5s. 

Girls (between the ages of 16 and 18). 4 s. 


The maximum periods during which benefits may be drawn are 
as follows: 

WEEKS 

Between March 3, 1921, and November 2, 1921 (first “special period”) 16 
Between November 3, 1921, and July 2,1922 (second “special period”) 16 
Thereafter, in each insurance year. 26 

The principal preliminary qualification for benefit in the period 
up to July 2, 1922, was the furnishing of proof of employment in insur¬ 
able work in at least twenty weeks since December 31, 1919, and of 
proof that the applicant was normally in insurable employment, 
was genuinely seeking whole-time employment, and was unable to 
obtain it. 

Benefit is not paid during the first three days of unemployment. 
Where, however, unemployment occurs again within six weeks of this 
“waiting period” of three days’ unemployment for which benefit is 
not paid, the applicant does not need to wait again before drawing 
benefits. 

The following statutory conditions for the receipt of unemploy¬ 
ment benefits are imposed: 

1. The workman claiming benefit must prove that he has paid not 
less than twelve contributions under the Act. 

2. He must make an application for benefit in the prescribed 
manner. 

3. He must prove that since the date of the application he has been 
continuously unemployed. 

4. He must prove that he is capable of work but unable to obtain 
suitable employment. 

5. He shall not have exhausted his right to unemployment benefit. 

Even though a workman has fulfilled the requirements of the 

statutory conditions, a workman is disqualified for benefit: 
a) If he has lost employment by reason of a stoppage of work which 
was due to a trade dispute at the factory, workshop, or other 
premises at which he was employed, for so long as the stoppage 
continues or till he gets work again elsewhere in an insured trade. 







UNEMPLOYMENT 


5“ 

b) If he had lost employment through misconduct, or has voluntarily 
left employment without just cause, for six weeks from the date 
of so losing employment. 

While he is an inmate of any prison, workhouse, or other institu¬ 
tion supported out of the public funds, or while receiving sickness 
or disablement benefits under the Government’s Health Insurance 
Scheme. « 

Workmen in receipt of compensation for accidents or of old-age 
pensions, if insured, are not debarred from claiming benefit. 

The condition that the unemployed workman must make applica¬ 
tion for benefit in the prescribed manner is the very core of the scheme. 
He is obliged to register at the employment exchange the fact of his 
unemployment. The exchange is in a position to know or discover 
whether his unemployment is due to lack of work in the establishment 
in which he has been engaged. It is able to find him work at his own 
employment in other establishments in the district, if vacancies exist. 
It might even help him to obtain employment in some other part of 
the country. The employment exchange thus controls the payment 
of benefit. It affords the test necessary for benefit. The unemployed 
workman when he presents himself to the exchange may thus be 
offered either employment or unemployment benefit. It is unfortu¬ 
nately too often assumed that the employment exchanges only dis¬ 
tribute benefits and that this work can be undertaken by local 
authorities, by the post-office, or by “approved societies other than 
trade unions.” This idea is entirely erroneous. If the exchanges did 
only distribute benefits, then indeed any paying agency could easily 
carry through this task. 

But their main function is to decide first whether the workman is 
really unemployed through no fault of his own and whether he is 
unable to obtain suitable employment. To be able to decide these 
questions a national system of employment exchanges is indispensable. 

b) TRADE UNIONS UNDER THE BRITISH ACT 1 

The Unemployment Insurance Act of 1920 extends the provision 
of compulsory unemployment insurance beyond the trades designated 
in the National Insurance Act of 1911, to nearly all the trades, and 
increases both the contributions and the benefits. 

1 Taken with permission from Clarence H. Northcott, Political Science Quarterly 
(September, 1921), pp. 421-25. (Published by Academy of Political Science, 
Columbia University.) 


512 


THE WORKER IN MODERN ECONOMIC SOCIETY 


An interesting feature carried over from the National Insurance 
Act by the Unemployment Act is the provision enabling trade unions 
or other societies described as “associations of employed persons” to 
pay out the state benefit. These societies must have rules providing 
unemployment pay at a rate at least one-third that payable under 
the act. Further, they must have a system of ascertaining wages 
and conditions in every industry covered by the act, so as to bring 
their members as speedily as possible into touch with employers’ 
vacancies. Such societies may pay out the state benefit, receiving 
in return a grant from the state of one shilling a week for each unem¬ 
ployed member as repayment of expenses incurred. In order to meet 
the conditions of this clause, many unions have set up schemes of 
unemployment benefit. The National Union of General Workers, 
whose membership comprises about two million unskilled workers, 
given six shillings a week benefit in return for twopence a week, 
contributed. The skilled trades give larger benefits, that of the 
National Union of Railwaymen being fifteen shillings a week. 

The clause above referred to was inserted because the unions 
insisted on their right to administer benefits and because they protested 
against granting this privilege to the great industrial insurance 
societies. Eventually, by the wording of the clause, these societies 
were excluded from such arrangements. The exercise of the right 
will be of benefit to the unions in controlling the labor market and in 
preventing deterioration of the morale of their members. 

The act also provides that any industry may draw up a special 
scheme for itself which, when approved by the Minister of Labor, 
will have statutory force. It is expected that a Whitley Council 
or some association representing a substantial majority of the 
employers and workers in the industry will ordinarily make such a 
proposal. Such special schemes must fulfil certain conditions: (i) 
They must cover all persons employed in the industry in the geo¬ 
graphical area concerned. (2) The benefits they propose must not be 
less favorable than those provided under the general scheme. (3) 
The state’s contribution to a special scheme shall not exceed three- 
tenths of its contribution under the general scheme. (4) Such 
schemes will be administered by a joint body of employers and workers 
in the industry, not by the Ministry of Labor, as in the case of the 
government scheme. 


UNEMPLOYMENT 


513 


c) UNEMPLOYMENT CASES UNDER THE BRITISH ACT 1 

1. It is clear that unemployment insurance benefits should not be 
paid during sickness or invalidity. 

2. The Act provides that workmen who have lost employment 
through misconduct or have voluntarily left employment without 
just cause shall be debarred from benefits for six weeks from the date 
of so losing employment. It is important to note that both these 
ideas are not precise, and that only as the Umpire’s decisions are 
laid down will a precise enumeration of the conditions and facts which 
constitute “misconduct” and “ just cause” be possible. 

A question continually to be faced by the Umpire is whether the 
employment exchange shall expect the unemployed workman to accept 
work far away from his home or to take up work in some other trade. 
When the distance is far or the railway connection bad, then workmen 
may refuse work in those places. 

The other question, as to whether a workman should take up work 
in some other trade, is one of the gravest problems that must be faced 
in dealing with the unemployment problem. Where the workman 
himself wishes to learn a new trade, then there is little difficulty and 
no objection to his doing so. 

But trade unions are stiongly opposed to workmen having two 
trades, i.e., to changing from one trade to another trade as a normal 
feature of their industrial life. They argue that most workmen will 
stand out for union conditions in the trade in which they feel them¬ 
selves to be most efficient, and will be prepared to accept lower wages, 
longer hours, and non-union conditions of labour in their “ secondary ” 
trade. Such a state of affairs would be, they contend very properly, 
very perilous to trade union standards. 

Trade disputes .—It is, of course, essential that the administrators 
of the British scheme of unemployment insurance shall be impartial 
in cases of strikes and lock-outs. Employers, as well as employees, 
contribute towards the Unemployment Fund, and therefore would 
object to their contributions being used against them in industrial 
disputes. It is therefore unanimously held by students of the problem 
that benefits shall not be paid during labour conflicts. 

Now it is well established that lock-outs tend to take place during 
a slack period when men are likely to be little employed or unemployed. 
More irritating even to workers is the consideration that sympathetic 

1 Adapted with permission from Joseph L. Cohen, Insurance against Unemploy¬ 
ment, pp. 237-42. (P.S. King & Son, Ltd., 1921.) 


514 THE worker in modern economic society 

lock-outs are apt to take place, and at such times it is exceedingly 
difficult to discover whether unemployment is due to a trade dispute 
or to the individual’s inability to find employment because of lack of 
work. 

14. SOME DIFFICULTIES IN UNEMPLOYMENT 

INSURANCE 1 

There are special difficulties in the path of unemployment insur¬ 
ance which are not met with in the case of accidents or diseases. 

What do these difficulties consist of ? It is the theory of insurance 
science that any risk may be insured, provided there is any regularity 
at all about its occurrence. Unemployment is a risk. It demonstrates 
a fair degree of regularity both in its dependence upon trade and in 
its time fluctuations, whether in annual or longer cycles. 

When the whole problem was investigated very thoroughly by 
the Imperial Statistical Office of Germany in 1906, the conclusion 
arrived at was that there were no insurmountable technical obstacles 
to the development of an unemployment insurance system. With 
comparatively few exceptions, the presence or absence of an accidental 
injury may be easily determined. It is an objective occurrence to 
be verified by statements of witnesses and the results may be controlled 
by expert medical supervision. The same, though perhaps in a some¬ 
what lesser degree, is true of sickness. Malingering and exaggeration 
of subjective symptoms may occur, but it must be the exception 
rather than the rule. 

But the fact of unemployment or, rather, lack of employment, 
the impossibility of finding employment, lacks that conclusive evi¬ 
dence. It often is and still oftener may be claimed to be the result 
of the individual’s efforts or absence of them. It may be easily 
simulated. 

Furthermore, unemployment insurance tends to result in an 
unfavorable selection of risks against the insuring institution. After 
the average risk is determined, it is the usual practice of every insuring 
company to exercise strict supervision over the selection of risks, 
accepting such individuals (or property) as are a better risk than 
usual, and rejecting those that are a worse than ordinary risk. In 
this way insurance is made safe and also profitable. The risk of 
unemployment is, to a large extent, dependent upon personal factors. 
The insurance institutions may eliminate such trades as have an 

1 Adapted with permission from I. M. Rubinow, Social Insurance , pp. 456-60, 
473 , 475 - 79 - (Henry Holt & Co., 1916.) 


UNEMPLOYMENT 


5 T 5 

excessive unemployment risk, but it is difficult to eliminate the indi¬ 
vidual with an abnormally high unemployment risk. 

Finally, it is argued that any system of unemployment insurance 
faces a serious difficulty when confronted with the conflict of capital 
and labor. A certain amount of unemployment is voluntary for 
legitimate reasons—that unemployment, either individual or collective 
(strikes), which results from bargaining over the wage-contract. 
It is not always easy to differentiate this form of unemployment from 
others. If unemployment insurance is extended over this form, it 
must meet with tremendous opposition from the employing class; 
if it is excluded, the opposition is equally strong on the side of the 
wage-workers. 

15. THE CLEVELAND GUARANTY PLAN 1 

Since July, 1918, when the Board of Referees undertook its duties 
in Cleveland, two notable advances in the conditions in the industry 
have been made: (1) the establishment of a standard wage scale 
affecting all shops and all classes of workers; (2) the adoption of 
production standards now well on the way of installation. The next 
desirable step to be taken is to break up one of the vicious features 
of seasonal industry by providing for as much continuity of employ¬ 
ment as is practicable. The manufacturers express their belief that a 
reduction in wages at this time will of itself greatly stimulate trade 
and insure to the workers a reasonable amount of continuity with its 
accompanying larger annual earnings. We believe that the reduction 
in wages decided upon will be of itself sufficient to tend toward this 
result, but we do not feel that this will be of itself sufficient or that the 
risk should be thrown entirely upon the workers. We, therefore, 
believe that the time has come when the regular workers in the industry 
are entitled to a guaranteed minimum period of work or compensation 
for the lack of it. Such guaranty is a proper and necessary burden 
on the industry, an obligation which the manufacturers of Cleveland 
have always recognized. It is all the more desirable and justified 
in this industry in Cleveland because the workers have for the past 
year contributed their full share, at heavy expense to the Union, to 
the creation and establishment of standards of production. 

Under these circumstances we are of the opinion that the regular 
workers in each shop should be guaranteed twenty weeks of work 

1 Taken with permission from Decision of the Board of Referees (April 22,1921), 
pp. 3-4. Reaffirmed December 24, 1921. 


516 THE WORKER IN MODERN ECONOMIC SOCIETY 

in each half year and one week of vacation a year with pay. Failure 
to live up to the guaranty shall entitle the worker during the period 
in default to a sum equal to two-thirds his minimum weekly wage, 
with a limitation, however, of the employers’ liability to 7§ per cent 
of his direct labor cost for the guaranty period. 

The seasonal character of the industry we believe requires this 
division of the year into two periods of six months each. At this time 
we set the first six months’ period as June 1st to December 1st. For 
that period the guaranty will be twenty weeks of work. That is to 
say, if any regular workers in any shop who does not voluntarily 
leave or is not discharged for good cause, shall not be given opportunity 
to work for a period of at least twenty weeks between the 1st of June, 
1921, and the 1st of December, 1921, then for so much time as shall 
represent the difference between the working time and such twenty 
weeks, there shall be paid to the worker for each week and pro rata 
for each part of the week, two-thirds of his minimum weekly wage, 
insofar as the fund in the shop as hereinabove limited will enable this 
to be done; regulations for some method of pro-rating between 
workers in the shop to be hereafter fixed as hereinafter provided. 
Provisions for a week’s vacation with full minimum pay will be made 
under regulations to be established by the Impartial Chairman at the 
close of the first year under the guaranty system. 

Each employer shall establish a guaranty fund by depositing 
with the Impartial Chairman each week a sum equal to 7! per cent 
of his direct labor payroll for the week or shall furnish to the Impartial 
Chairman security acceptable to him for the enforcement of the 
guaranty up to the limit of his liability. All matters of detail in 
the pro-rating among employees and in the administration of the 
guaranty system to the same rights of appeal as are provided for in 
the Agreement, and he shall have custody and control of any funds 
or securities deposited for the enforcement of the guaranty. 

Dated April 22, 1921 

Julian Mack 
Samuel J. Rosensohn 
John R. McLane, Referees 
Dorothy Kenyon, Secretary 

The following list shows the total amounts paid and “saved” by 
members of the Cleveland Garment Manufacturers’ Association in 
the six-months employment guarantee period in 1921: 


UNEMPLOYMENT 


517 


TABLE LXXXIII 


Firm 

Total 

7! Per Cent 

Reported 
Amount Paid 
to Workers 

Amount 
“Saved” 
by Firm 

I . 

$ 2558.93 

$ 54.64 

$ 2504.29 

2. 

138.86 

138.86 


3 . 

17469.50 

17469.50 



4 . 

2 I 55-56 

II 5 - 4 I 

2040.15 

5 . 

1126.76 

22.52 

1104.24 

6 . 

3353-32 


3353-32 



7 . 

3722.35 

578.67 

3143.68 

8. 

2658.04. 

2658.04 


9 . 

1263.34 

1203.35 

59-99 

10. 

1604.20 

1458.35 

35-85 

11. 

2375 - 5 I 

1935-75 

439-76 

12 . 

2103.80 

1879.05 

224.75 

13 . 

4666.18 

1226.16 

3440 . 02 

14 . 

2151.23 

2151 . 18 

•05 

15 . 

7085.25 

15.82 

7069.43 

l6 . 

020.78 

929.78 


17 . 

6436 . 04 

3771.OI 

2665.03 

18 . 

959.68 

186.23 

773-45 

TO. 

1557.59 


1557.59 

20 . 

\J 1 J 7 

2138.53 

1945.70 

192.83 

21 . 

407.68 

205.98 

201 . 70 

22. 

1358.64 

404.87 

953-77 

23. 

I425.20 

499 •85 

625.35 

24. 

1595.88 

1491.08 

104.80 

25 . 

I367.I3 

1036.77 

33 0 -36 

26. 

I325.29 

447.81 

877.48 


I349.64 


1349.64 

28. 

2008.18 

35 i- 2 o 

1656.98 

29. 

2691.81 

387.00 

2304.81 

3 °. 

4992.83 

2191.95 

2800.88 

31. 

5954-46 

3831-33 

2123.13 

32. 

1481.61 

99805 

483•56 

7 2 

861.60 


861.60 

oJ * * 




Totals. 

$93,274.40 

$32,526.41 

$60,747.99 


PROBLEMS 

1. What do you understand the term “unemployed” to mean? Is a 
worker unemployed if he is out of work because he is (&) too lazy to 
work, (6) not offered a job paying as much as he desires, ( c ) unaccus¬ 
tomed to perform the kind of work which is available ? 

2. “A definition should always be made with a point of view in mind.” 
Granted, how might a point of view affect the definition of such a term 
as “ unemployed ” ? 

3. Distinguish between “the unemployed” and “the unemployable.” 

4. What conclusions do you gather from the statistics upon unemploy¬ 
ment given at the beginning of this chapter ? 


























































THE WORKER IN MODERN ECONOMIC SOCIETY 


518 

5. “ A good man can always find a job.” Do you agree ? 

6. Does large-scale production tend to increase the risks of unemploy¬ 
ment ? Why or why not ? 

7. Do not the policies of labor unions cause unemployment ? Justify 
your answer. 

8. “The problem of unemployment is the problem of adjusting the supply 
of labor and the demand for labor.” Comment. 

9. Woman and child labor is often spoken of as the cause of unemploy¬ 
ment among men ? Do you agree ? 

10. “Unemployment is due to ignorance.” Why or why not ? 

11. “Our standard of. living is too inelastic. If men were willing to 
accept fluctuating wages, there would be little or no unemployment.” 
Discuss. 

12. “Labor-saving machinery produces unemployment.” Discuss. 

13. “Control of population is the keynote to the solution of the problems 
of unemployment.” Explain and criticize. 

14. “The fluctuation in the price and purchasing power of money is the 
greatest of all labor problems.” Discuss. 

15. “Restriction of output, shortening of the normal work day, and regula¬ 
tion of overtime are three policies of organized labor which find their 
justification in the fact of unemployment.” Are these valid devices ? 

16. “The ‘make work’ and ‘lump of labor’ philosophy find their rootage 
in unemployment.” What are these philosophies ? How do you 
account for them ? 

17. “Unemployment turns workers who are capable and willing into men 
who are neither capable nor willing to hold a steady job if they could 
get one.” 

18. “Unemployment is the cause of inefficiency.” “Inefficiency is the 
cause of unemployment.” Which statement is true ? 

19. “Unemployment involves not only a lessened income but is definitely 
related to (1) the destruction of the worker’s efficiency, (2) the entrance 
of women into industry, (3) removal of children from school, (4) indus¬ 
trial and political unrest, and (5) social demoralization.” Give content 
to each of these factors. 

20. Name some of the social and economic conditions responsible for the 
appearance of the casual laborer. Has he any parallel in other economic 
systems ? 

21. “Large hosts of workers will always be casually employed but what of 
it ? Your doctor and dentist are casually employed.” Criticize. 

22. What influence have the unemployed at the gate upon the wages of 
those at work ? 

23. “Fear of unemployment causes men to work.” “Fear of unemploy¬ 
ment causes men to loaf.” Which statement is true? 

24. Why shouldn’t the worker pay his own unemployment insurance just 
as he pays his life insurance ? 


UNEMPLOYMENT 


519 


25. “Society owes me a living.” Comment. How far is society under an 
obligation to a worker who is willing but cannot find work because of 
(a) ignorance, (b) old age, ( c ) illness, ( d ) laziness, ( e ) accident ? 

26. Would not more elasticity in working hours help absorb the unemployed 
in critical periods ? Why does not such elasticity exist ? 

27. “Unemployment is a matter of credit. Control the granting of credit 
by the banks and unemployment will largely cease as a problem.” 
Comment. 

28. “Unemployment can be controlled to a great extent by evolving proper 
marketing methods. Advertising in particular has a place in any 
discussion upon this subject.” Indicate how this might be true in a 
given case. 

29. “If the national, state, and local governments would plan public im¬ 
provements far enough in advance, opportunities for workers could be 
opened up at critical periods thereby greatly reducing unemployment.” 
Is this feasible ? 

30. Just how would a centralized labor market help or tend to help reduce 
the existing amount of unemployment ? If some of the unemployed 
are thereby employed all the time, will not some others be unemployed 
all the time ? 

31. If a reserve of labor is necessary to the modern business manager 
should he meet the cost of that reserve in the first place by paying 
unemployment benefits to carry the reserve along ? 

32. Should each individual industry be forced to support all of the laborers 
and labor reserves that are used in its work during periods of unemploy¬ 
ment ? Why or why not ? 

33. What do you think of the suggestion that the employer shall be forced 
to assume the obligation of paying $1.00 per day for 13 weeks to all 
workers hired by him and subsequently discharged because of lack of 
work ? 

34. “Society profits by the existence of a labor reserve and why shouldn’t 
it meet the cost directly?” How? 

35. The object of social insurance is not only to provide for unavoid¬ 
able happenings which the individual is unable to bear but more 
especially to locate the costs of insurance so that those who have the 
power to prevent, for example, unemployment, will find it profitable to 
eliminate it.” Granted, who possesses that power? the worker? 
the employer ? society ? 

36. “Any system of unemployment insurance faces a serious difficulty when 
confronted with the conflict of capital and labor.” Explain. 

37. “Trade unions possess certain natural advantages in the field of unem¬ 
ployment insurance.” What are they ? 

38. If employment insurance is paid to the non-workers, will not govern¬ 
ment employment bureaus be necessary to administer the funds, collect 
information, and determine whether workers are malingering ? Discuss. 


5 2 ° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


39. Are conditions in America as well suited to compulsory unemployment 
insurance as they are in England ? 

40. Doesn’t the paying of accident, sickness, and unemployment insurance 
tend to promote laziness among uneducated people in that it seems to 
be giving something for nothing ? 

41. Does unemployment insurance from the standpoint of the laborer 
increase the disutility of work ? 

42. “Justice dictates that the industry which depends upon the workers to 
keep it alive, should take care of them when they are unemployed. 
That can be done only by the creation of a special fund for the payment 
of unemployment wages, no gift and no alms, but wages from the 
industry to the worker. It is our opinion that such a fund should be 
created by the weekly payment by the employers of a given percentage 
of the pay-roll of our members , which shall not be deducted from the 
pay-roll but paid into the fund in addition to the pay-roll.” Comment. 

43. “I do not want to see an unemployment insurance law, modeled after 
the British Act, enacted in this country. It is very clear to me that 

industry should be made as nearly self-supporting as possible. 

It would be very simple to put the money costs of unemployment 
upon industries. The premium rate would be lowest for the most 
stable industries and highest for those in which employment is regularly 
irregular.” Discuss. 

REFERENCES FOR FURTHER READING 

Beveridge, W. H., Unemployment 
Cohen, Joseph L., Insurance against Unemployment 
Eastman, Crystal, Work, Accident, and the Law 
Epstein, Abisham, Facing Old Age 

Federated American Engineering Societies, Waste in Industry 
Hookstadt, Carl, Comparison of Workmen’s Compensation Insurance and 
Administration, Government Printing Office, April, 1922 
Report of the Health Commission of Illinois, 1919 
Report of the President’s Conference on Unemployment , October, 1921 



PART FIVE 

THE WORKER’S APPROACH TO HIS PROBLEMS 








































































































































INTRODUCTION 


This part discusses the principal organized methods by which 
workers attempt to cope with their problems—as producers, by trades 
unions; as consumers, by co-operative societies; and as voters, by 
political action. All three forms of activity are much more highly 
developed in England than in this country. In the United States, 
trade unionism is by far the most important of the three, although 
there are indications that co-operation and political action will 
assume, in the near future, considerable importance. 

The chapters on Trade Unions open with some short statements 
giving some of the reasons why men join unions. If we were to trace 
all the motives at work, we should have to multiply these selections 
many fold. Following this is a historical section tracing the main 
trend of organization since its inception in this country, only slightly 
over a century ago. If the space devoted exclusively to the American 
Federation of Labor seems meager, it should be noted that most of 
the remaining selections in the section on unionism deal either with it 
or with its component unions. The chapters on union structure and 
policies comprise the niajor portion of this division and are the most 
important. Most of the issues that arise in the organization and 
conduct of union activities are presented in some detail. On all 
controversial questions, several differing points of view are given in 
order that the student may know the beliefs of the various groups 
together with the reasons why they are held and from these form an 
intelligent and independent opinion of his own. 


523 


CHAPTER XVIII 


AMERICAN TRADE UNIONISM: CAUSES 

AND HISTORY 

A. Reasons for the Existence of Unions 

i. THE ECONOMIC PROTECTION AFFORDED THE 

WORKERS BY UNIONISM 1 

The average wage earner has made up his mind that he must 
remain a wage earner. He has given up the hope of a kingdom to 
come, where he himself will be a capitalist, and he asks that the reward 
for his work be given to him as a workingman. Singly, he has been 
too weak to enforce his just demands and he has sought strength in 
union and has associated himself into labor organizations. 

In its fundamental principle trade unionism is plain and clear 
and simple. Trade unionism starts from the recognition of the fact 
that under normal conditions the individual, unorganized workman 
cannot bargain advantageously with the employer for the sale of his 
labor. Since the workingman has no money in reserve and must 
sell his labor immediately, since, moreover, he has no knowledge of 
the market and no skill in bargaining, since, finally, he has only his 
own labor to sell, while the employer engages hundreds or thousands 
of men and can easily do without the services of any particular 
individual, the workingman, if bargaining on his own account and for 
himself alone, is at an enormous disadvantage. The “ individual 
bargain,” or individual contract, between employers and men means 
that the condition of the worst and lowest man in the industry will 
be that which the best man must accept. From first to last, from 
beginning to end, always and everywhere, trade unionism stands 
unalterably opposed to the individual contract. It is this principle, 
the absolute and complete prohibition of contracts between employers 
and individual men, upon which trade unionism is founded. 

To find a substitute for the individual bargain, which destroys 
the welfare and the happiness of the whole working class, trade unions 
were founded. A trade union, in its usual form, is an association of 
workmen who have agreed among themselves not to bargain indi- 

1 Adapted with permission from John Mitchell, Organized Labor, pp. ix-n. 
(American Book and Bible House, 1903.) 

5 2 4 


AMERICAN TRADE UNIONISM 


525 


vidually with their employer or employers, but to agree to the terms of 
a collective or joint contract between the employer and the union. 
The fundamental reason for the existence of the trade union is that 
by it and through it, workmen are enabled to deal collectively with 
their employers. The difference between the individual and the 
collective or joint bargain is simply this, that in the individual contract 
or bargain one man of a hundred refuses to accept work, and the 
employer retains the services of ninety and nine; whereas in the 
collective bargain the hundred employees act in a body, and the 
employer retains or discharges all simultaneously and upon the same 
terms. The ideal of trade unionism is to combine in one organization 
all the men employed, or capable of being employed, at a given trade, 
and to demand and secure for each and all of them a definite minimum 
standard of wages, hours, and conditions of work. 

Trade unionism thus recognizes that the destruction of the 
workingman is the individual bargain, and the salvation of the work¬ 
ingman is the joint, united, or collective bargain. To carry out a 
joint bargain, however, it is necessary to -establish a minimum of 
wages and conditions which will apply to all. By this is not meant 
that the wages of all shall be the same, but merely that equal pay shall 
be given for equal work. There cannot be more than one minimum 
in a given trade, in a given place, at a given time. If the bricklayers of 
the city of New York were all organized and the union permitted half of 
its members to work for forty cents an hour, while the other half, in 
no wise better workmen, were compelled or led to ask for fifty cents, 
the result would be that the men receiving fifty cents would be obliged 
either to lower their wages or get out of the trade. To secure to any 
union man fifty cents an hour, all union men of equal skill must demand 
at least an equal sum. The man who wants fifty cents an hour is 
not injured by other unionists asking or getting ten or twenty cents 
in excess of this minimum, but he is injured by fellow-craftsmen 
accepting any wage less than the minimum. The same rule of 
collective bargaining applies to the hours of labor. If all union 
bricklayers in New York City were to receive four dollars a day and 
some were, for this pay, to work eight hours, others ten, and still 
others twelve and fifteen hours, the result would be that the employers 
would by preference employ the men who were willing to work fifteen 
hours. As a consequence, the men willing to work only eight or ten 
hours would lose their positions or would be obliged either to reduce 
their wages or work as long as their competitors who were employed for 


526 THE WORKER IN MODERN ECONOMIC SOCIETY 

i 

twelve or fifteen hours. What is true of wages and of hours of labor 
is equally true of all the conditions of work. If the trade union did 
not insist upon enforcing common rules providing for equal pay 
for equal work and definite conditions of safety and health for all 
workers in the trade, the result would be that all pretense of a joint 
bargain would disappear, and the employers would be free constantly 
to make individual contracts with the various members of the union. 
The trade union does not stand for equal earnings of all workmen. 
It does not object to one man’s earning twice as much as the man 
working by his side, provided both men have equal rates of pay, 
equal hours of work, equal opportunities of securing work, and equal 
conditions of employment. The union does not object to an employer’s 
rewarding especially efficient workers, or even favored workers, by 
paying them more than the union scale, or granting them shorter hours 
than provided for by the joint agreement. What the union does 
stand for is merely equal rates of pay—equal pay for equal work; 
and while it will allow a man to receive twice as much as his fellow- 
craftsmen, it will not permit him to do so by underbidding them in 
wages or by working under less favorable conditions or for longer hours. 
Neither does the union oppose competition among unionists for 
positions, although it demands that this competition be solely upon 
the basis of efficiency and not upon that of reduced wages, lengthened 
hours, or any abatement from the conditions fixed by the collective 
bargain. 

Whether the union demand a higher standard of healthfulness, 
comfort, or decency in the factories, or a greater degree of protection 
from machinery, or any other concession ministering to the health 
or safety of the employee, the demand is always in the form of a cer tain 
minimum for all workers. 

The recognition of the union is nothing more nor less than the 
recognition of the principle for which trade unionism stands, the right 
to bargain collectively and to insist upon a common standard as a 
minimum. Workingmen have a nominal, but not a real freedom 
of contract, if they are prevented from contracting collectively 
instead of individually. The welfare of the working classes, as of 
society, depends upon the recognition of this principle of the right of 
employees to contract collectively. An employer, be he ever so 
well-meaning, stands in the way of future progress if he insist upon 
dealing with his workmen “as individuals.” While in his establish¬ 
ment wages may not by this means be reduced, owing to the fact that 


AMERICAN TRADE UNIONISM 


527 


other establishments are organized, still the principle for which he 
stands, if universally adopted, would mean the degradation and im¬ 
poverishment of the working classes. There are many employers who 
surrender the principle of the individual bargain without accepting the 
principle of the collective bargain. These employers state that they 
do not insist upon dealing with their employees as individuals, but 
that they must retain the right of dealing with “ their own employees 
solely, ” and that they must not be forced to permit a man who is not 
their own employee to interfere in their business. The right to 
bargain collectively, however, or to take any other concerted action, 
necessarily involves the right to representation. Experience and 
reason both show that a man, even if otherwise qualified, who is 
dependent upon the good will of an employer, is in no position to 
negotiate with him, since an insistence upon what he considers to 
be the rights of the men represented by him may mean his dismissal 
or, at all events, the loss of the favor of his employer. Not only 
should workingmen have the right of contracting collectively, but 
they should also have the right of being represented by whomsoever 
they wish. The denial of the right of representation is tyranny. With¬ 
out the right to choose their representative, the men cannot enjoy the 
full benefit of collective bargaining. To avoid this calamity and to 
raise the working classes to a high state of efficiency and a high 
standard of citizenship, the organized workmen demand and insist 
upon “the recognition of the union.” 

2. A FUNCTIONAL CLASSIFICATION OF TRADES UNIONS 1 

There are in the United States today hundreds of union organiza¬ 
tions, each practically independent or sovereign and each with its 
own and often peculiar aims, policies, demands, methods, attitudes, 
and internal regulations. Nor is there any visible or tangible bond 
that unites these organizations into a single whole, however tenuous. 
Groups there are indeed with overstructures and declared common 
aims and methods. But group combats group with the bitterness 
that can arise only out of the widest diversity of ideals and methods. 

A slight acquaintance with the history of organized labor shows 
that this situation is not unique and at the same time furnishes the 
apparent clues to its explanation. It reveals the fact that unionism 

1 Adapted with permission from Robert F. Hoxie, “Trade Unionism in the 
United States, General Character and Types,” Journal of Political Economy, XXII 
(1914), 203-4, 212-16. 


528 THE WORKER IN MODERN ECONOMIC SOCIETY 


has not a single genesis, but that it has made its appearance, time after 
time, independently, wherever in the modern industrial era a group 
of workers, large or small, has developed a strong, internal conscious¬ 
ness of common interests. It shows, moreover, that each union and 
each union group has undergone a constant process of change or 
development, functionally and structurally responding apparently to 
the group psychology and therefore to the changing conditions, 
needs and problems, of its membership. In short, it reveals trade 
unionism as above all else essentially an opportunistic, a pragmatic 
phenomenon. 

For if the history of unionism seems to admit of any positive 
generalizations they are that unionists have been prone to act first 
and to formulate theories afterward and that they have acted habitu¬ 
ally to meet the problems thrust upon them by immediate circum¬ 
stances. Everywhere they have done the thing which under the 
particular circumstances has seemed most likely to produce results 
immediately desired. Modes of action which have failed when 
measured by this standard have been rejected and other means 
sought. Methods that have worked have been preserved and 
extended, the standards of judgment being always most largely the 
needs and experiences of the group concerned. So that prevailingly, 
whatever theory unionists have possessed has been in the nature of 
group generalization slowly developed on the basis of concrete experi¬ 
ence. 

In making these statements it is not intended to imply that 
general economic, political, and social theories have not played a 
part in the genesis of unions or in the molding of their function and 
structure. Nor is it intended to deny that some unions have been 
formed and dominated by individuals and small groups of leaders. 
Idealism has frequently been a genetic and formative force in union 
history, and the autocrat has played an important role in union affairs. 
But apparently history warrants the general statements that unions, 
and especially unions that have lived and worked, have arisen mainly 
in direct response to the immediate needs and problems of specific 
working groups, and that they have developed characteristically by 
the trial-and-error method. 

The first and perhaps most clearly recognizable functional type 
may be termed business unionism. Business unionism appears 
most characteristically in the programs of local and national craft 
and compound craft organizations. It is essentially trade-conscious 
rather than class-conscious. That is to say, it expresses the view- 


AMERICAN TRADE UNIONISM 


529 


point and interests of the workers in a craft or industry rather than 
those of the working class as a whole. It aims chiefly at more 
here and now for the organized workers of the craft or industry, 
in terms mainly of higher wages, shorter hours, and better working 
conditions, regardless for the most part of the welfare of the 
workers outside the particular organic group, and regardless in 
general of political and social considerations except in so far as 
these bear directly upon its own economic ends. It is conserva¬ 
tive in the sense that it professes belief in natural rights and accepts 
as inevitable, if not as just, the existing capitalistic organization and 
the wage system as well. It regards unionism mainly as a bargaining 
institution and seeks its ends chiefly through collective bargaining 
supported by such methods as experience from time to time indicates 
to be effective in sustaining and increasing its bargaining power. 
Thus it is likely to be exclusive, that is, to limit its membership by 
means of the apprenticeship system and high initiation fees and dues, 
to the more skilled workers in the craft or industry or even to a portion 
of these; though it may, where immediate circumstances dictate, 
favor a broadly inclusive policy—when, for example, the unregulated 
competition of the unorganized and unskilled seriously threatens to 
sweep aside the trade barriers and break down the standards of wages, 
hours, and shop conditions which it has erected. Under these circum¬ 
stances it tends to develop a broad altruism and to seek the organiz- 
tion of all the workers in the craft or industry. In harmony with its 
business character, it tends to emphasize discipline within the organi¬ 
zation and is prone to develop strong leadership and to become some¬ 
what autocratic in government, though government and leaders 
alike are ordinarily held pretty strictly accountable to the pragmatic 
test. When they fail to “deliver the goods” both are likely to be 
swept aside by a democratic uprising of the rank and file. In method, 
business unionism is prevailingly temperate and economic. It favors 
voluntary arbitration, deprecates strikes, and avoids political action, 
but it will refuse arbitration and resort to strikes and politics when 
such action seems best calculated to support its bargaining efforts 
and increase its bargaining power. This type of unionism is best 
represented perhaps in the programs of the railway brotherhoods, 
though these organizations, as we shall see later, present some charac¬ 
teristics of a vitally different nature. 

The second union functional type seems best designated by the 
terms friendly or uplift unionism. Uplift unionism, as its name 
indicates, is characteristically idealistic in its viewpoint. It may 


53 ° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


be trade-conscious, or broadly class-conscious, and at times even claims 
to think and act in the interest of society as a whole. Essentially it is 
conservative and law-abiding. It aspires chiefly to elevate the moral, 
intellectual, and social life of the worker, to improve the conditions 
under which he works, to raise his material standards of living, give 
him a sense of personal worth and dignity, secure for him the leisure 
for culture, and insure him and his family against the loss of a decent 
livelihood by reason of unemployment, accident, disease, or old age. 
Uplift unionism varies greatly in degree of inclusiveness and in form 
of government, but the tendency seems to be toward the greatest 
practicable degree of mutuality and democracy. In method, this 
type of unionism employs collective bargaining but stresses mutual 
insurance, and drifts easily into political action and the advocacy of 
co-operative enterprises, profit sharing, and other idealistic plans for 
social regeneration. The nearest approach in practice to uplift 
unionism is perhaps to be found in the program of the Knights of 
Labor, though that organization has varied in many respects from the 
strict type. 

As a third distinct functional type, we have what most appropri¬ 
ately may be called revolutionary unionism. Revolutionary unionism, 
as the term implies, is extremely radical both in viewpoint and in 
action. It is distinctly class-conscious rather than trade-conscious. 
That is to say, it asserts the complete harmony of interests of all 
wage workers as against the representatives of the employing class 
and seeks to unite the former, skilled and unskilled, together, into 
one homogeneous fighting organization. It repudiates, or tends to 
repudiate, the existing institutional order and especially individual 
ownership of productive means and the wage system. It looks upon 
the prevailing codes of right and rights, moral and legal, as in general 
fabrications of the employing class designed to secure the subjection 
and to further the exploitation of the workers. In government it 
aspires to be democratic, striving to make literal application of the 
phrase vox populi, vox Dei. In method, it looks askance at collective 
bargaining and mutual insurance as making for conservatism and 
hampering the free and united action of the workers. 

Of this revolutionary type of unionism there are apparently two 
distinct varieties. The first finds its ultimate ideal in the socialistic 
state and its ultimate means in invoking class political action. For 
the present it does not entirely repudiate collective bargaining or the 
binding force of contract, but it regards these as temporary expedients. 


AMERICAN TRADE UNIONISM 


531 


It would not now amalgamate unionist and socialist organizations 
but would have them practically identical in membership and entirely 
harmonious in action. In short, it looks upon unionism and socialism 
as the two wings of the working-class movement. The second variety 
or revolutionary unionism repudiates altogether socialism, political 
action, collective bargaining, and contract. 

Socialism is to it but another form of oppression; political action, 
a practical delusion; collective bargaining and contract, schemes of 
the oppressor for preventing the united and immediate action of the 
workers. It looks forward to a society based upon free industrial 
association and finds its legitimate means in agitation rather than in 
methods which look to immediate betterment. Direct action and 
sabotage are its accredited weapons, and violence its habitual resort. 
These varieties of the revolutionary type may be termed respectively 
socialistic and quasi-anarchistic unionism. The former is perhaps 
most nearly represented in the United States by the Western Federa¬ 
tion of Miners, the latter by the Industrial Workers of the World. 

Finally in the union complex it seems possible to distinguish a 
mode of action sufficiently definite in its character and genesis to 
warrant the designation predatory unionism. This type, if it be truly 
such, cannot be set apart on the basis of any ultimate social ideals or 
theory. It may be essentially conservative or radical, trade-conscious 
or class-conscious. It appears to aim solely at immediate ends, and its 
methods are wholly pragmatic. In short, its distinguishing character¬ 
istic is the ruthless pursuit of the thing in hand by whatever means 
seems most appropriate at the time, regardless of ethical and legal 
codes or the effect upon those outside its own membership. It may 
employ business, friendly, or revolutionary methods. Generally its 
operations are secret and apparently it sticks at nothing. 

Of this assumed union type also there appear to be two varieties. 
The first may be termed hold-up unionism. This variety is usually 
to be found in large industrial centers masquerading as business 
unionism. In outward appearance it is conservative; it professes a 
belief in harmony of interests between employer and employee; 
it claims to respect the force of contract; it operates openly through 
collective bargaining and professes regard for law and order. In 
reality it has no abiding principles and no real concern for the rights 
or welfare of outsiders. Prevailingly it is exclusive and monopolistic. 
Generally it is boss-ridden and corrupt, the membership for the most 
part being content to follow blindly the instructions of the leaders so 


532 


THE WORKER IN MODERN ECONOMIC SOCIETY 


long as they “deliver the goods.” Frequently it enters with the 
employers of the group into a double-sided monopoly intended to 
eliminate both capitalistic and labor competition and to squeeze the 
consuming public. With the favored employers it bargains not only 
for the sale of its labor but for the destruction of the business of rival 
employers and the exclusion of rival workmen from the craft or 
industry. This variety of unionism has been exemplified most fre¬ 
quently among the building trades organizations under the leader¬ 
ship of men like the late notorious “Skinny” Madden. 

The second variety of predatory labor organization may be called, 
for want of a better name, guerilla unionism. This variety resembles 
the first in the absence of fixed principles and in the ruthless pursuit 
of immediate ends by means of secret and violent methods. It is to 
be distinguished from hold-up unionism, however, by the fact that it 
operates always directly against its employers, never in combination 
with them, and that it cannot be bought off. It is secret, violent, 
and ruthless, seemingly because it despairs of attaining what it 
considers to be legitimate ends by business uplift, or revolutionary 
methods. This union variant has been illustrated recently in the 
campaign of destruction carried on by the Bridge and Structural 
Iron Workers. 

[Note: Mr. Hoxie later added a fifth functional type—dependent 
unionism. Some of these unions were dependent upon other unions 
for support, notably those supported by the union label. Some 
were dependent upon the employers and were really fostered by 
them.— Ed.] 

B. Historical Development of Unionism in the United States 1 

3. GENERAL FORCES AT WORK IN THE DEVELOP¬ 
MENT OF TRADES UNIONS 2 

The condition which seems to distinguish most clearly the history 
of labour in America from its history in other countries is the wide ex¬ 
panse of free land. As long as the poor and industrious can escape 
from the conditions which render them subject to other classes, so 
long do they refrain from that aggression on the property rights or 
political power of others, which is the symptom of a “labour move¬ 
ment.” 

1 [Note: The material of this section should be studied in close correlation 
with that of chapters v and vi.—E d.] 

2 Adapted with permission from John R. Commons and associates, History of 
Labour in the United States, I, 3-19. (The Macmillan Co., 1921.) 


I 


AMERICAN TRADE UNIONISM 533 

But even here we are likely to ascribe to the bounty of nature what 
proceeds from the struggle of classes. Nature, in the physical sense, 
has been as bountiful to the poor and industrious of Australia in 
proportion to their numbers, as it has been in America. But how 
different the outcome! In Australia the land has been locked up in 
great holdings, and labourers have been forced to fight the battles of 
organization in the cities and on the ranches, rather than escape as 
individuals to lands that are free. Thus trade unionism, socialistic 
politics, governmental coercion of employers, a parliament dominated 
by a labour party, characterize the labour movement of Australasia. 

America, under the constitution of 1787, started off with a similar 
seizure of its western lands by speculators and slave owners. The 
masses of the people gradually awakened, then resisted, finally 
revolted, and a political struggle of half a century over the land laws 
ended in a Civil War, with its homestead law. The struggle was 
renewed when the railroad land grants of the Civil War brought 
back again in a new form the seizure by speculators, and again was 
renewed under the name of “conservation of natural resources.” 
Free land was not a mere bounty of nature; it was won in the battle 
of labour against monopoly and slavery. 

The vast area of the United States, coupled with free trade within 
that area and a spreading network of transportation, has developed 
an unparalleled extension of the competitive area of markets, and 
thereby has strikingly distinguished American movements from those 

of other countries. For, it is not so much the mechanical inventions 

* 

and the growth of industrial technique, that have given character to 
American industrial movements, as it is the development and concen¬ 
tration of bargaining power over immense areas. In practically the 
entire colonial period, the interests of the small merchant, employer, 
and journeyman were identical, and so far as they formed organizations 
included, often in the same individual, all of the economic functions 
of wage-earning, price-fixing, and profit-making. 

It was not until after the constitution of 1787, and its levelling 
down of the market barriers which each colony had erected against the 
others, that a new stage began to appear with its wholesale markets, its 
credit system, and its creation of the merchant-capitalist. The dis¬ 
tinction between the employer and the wage-earner at the time was not 
so much the amount of his income or his possession of capital, as the 
contingent and speculative character of his income. His profit was 
the margin between the prices he paid for labour and the prices he 
received for his product. The wage-earner, on the other hand, 


534 


THE WORKER IN MODERN ECONOMIC SOCIETY 


received a stipulated income for his physical exertion. The prices 
received by the contractor or employer were at the mercy of the 
merchant-capitalist and his main source of profit was his ability to 
reduce the prices which he paid for labour. This ‘‘sweated” con¬ 
dition, produced by the widening of the labour market and seen 
most clearly in the decade of the thirties, drove the wage-earner as 
such to his first conscious union with competing labourers in defence 
against the master-workman who had now become the “boss.” 
This was the signal for the break-up of the guild-like industrial stage 
which united master, journeyman and apprentice, and the substitution 
of the trade union of journeymen and the employers’ union of masters, 
each contending for control of the apprentice. Different trades 
experience this break-up at different periods, and belated trades repeat 
the industrial history of older ones. Even today, we often find, in 
so-called trade unions supplying a narrow local market with small 
investments in tools, like teamsters and musicians, what is really a 
guild of masters, owners and wage-earners. 

Not until the nation had become a single market did the strictly 
modern movement, similar to that of older nations, take form and 
animus. While economic forces have widened competitive areas to 
the limits of the nation, a system of government by states has covered 
these areas by widely divergent laws and administration. At the 
same time, the courts, blocking the way of a new aggressive class with 
precedents created to protect a dominant class, have had, in this 
country, a high authority unknown in other lands. By vetoing the 
laws which labour in its political struggles has been able to secure, 
the courts, joined with divergent state policies, have excluded or 
delayed labour from legislative influence. Consequently the energies 
of organization are turned to the economic field. 

While the area of market competition has extended more widely 
than in other countries, the level of prices and wages across this area 
has arisen and fallen more excessively. Cycles of prosperity and 
depression have characterized all lands during the expansion of 
industry and credit in the nineteenth century, but the American 
cycles have touched higher peaks and lower depths. To the specula¬ 
tive character of American credit have been added the vagaries of paper 
money. The two peaks of paper money, in the thirties and sixties, 
indicate two periods of excited, aggressive organization, forced up in 
advance of their time, if measured only by industrial evolution. 
In these and other periods of rising prices, when the cost of living was 


AMERICAN TRADE UNIONISM 


535 


outleaping theorise of^wages, when business was prosperous and labour 
in demand, then aggressive strikes, trade unionism, class struggle, 
suddenly spread over the industrial sections of the country. At the 
other extreme, in the periods of falling prices, with their depression 
of business and distress by unemployment, labour, in its helplessness 
and failure of defensive strikes, has turned to politics, panaceas, or 
schemes of universal reform, while class struggle has dissolved in 
humanitarianism. 

It is by viewing the broad perspective of these various forces that 
we are able to distinguish separate historical periods. The colonial, 
or dormant, period extends properly to the decade of the twenties. 
But in the thirties the public was suddenly awakened, and a new term, 
trades’ union, appeared. Here appears the first newspaper published 
in their interest, and a study of the period shows the first painful 
efforts of wage-earners to extricate themselves both from the existing 
political parties and from the guild-like organizations which their 
employers controlled. The legislative measures which they put 
forward were not so much the trade union measures of the later 
decades of the century, as those individualistic measures which assert 
the rights of persons against the rights of property. Free education 
supported by taxes on property, mechanics’ liens on property in order 
to secure the wage-earner as a creditor, prohibition of* seizure for debt 
by the capitalist creditor of the body of the propertyless debtor, 
followed in the next decade by the actual exemption of wages and 
tools from execution for the wage-earners’ debt—these were the new 
jurisprudence by which, for the first time in the modern world, man¬ 
hood suffrage created personal rights superior to property rights. 
Slow-moving as were these legislative reforms and beneficial as they 
might be to later generations, the wage-earners of the thirties soon 
forgot them in their trades’ union effort of 1835 and 1836 to force 
wages up with the cost of living. 

The panic of 1837 brought to a sudden stop these aggressions, 
and, for the next dozen years we find the most astonishing junction of 
humanitarianism, bizarre reforms and utopias, protective tariffs and 
futile labour legislation, known to our history. 1 Swallowed, as these 
were, in the rising prices of the gold discoveries and in the anti-slavery 
agitation, which approached its crisis in the early fifties, this human- 

1 [Note: Trade-unions, particularly in the latter part of the forties and early 
fifties, were not as absent as Professor Commons implies. See L. S. Ware’s forth¬ 
coming book, The Labour Movement 1840-1860 .— Ed.] 


536 THE WORKER IN MODERN ECONOMIC SOCIETY 


itarian period slipped away into a second trade union period of the 
middle of the decade of the fifties, scarcely noticed beneath the 
absorbing premonitions of civil war. 

The nationalization period, from the War to the end of the seven¬ 
ties, repeats on a bigger scale of prosperity and depression and a wider 
area of competition the events of the thirties. During the sixties 
the railroads, paper money and mechanical invention join together 
to throw up agitated organizations, notably the National Labor Union, 
a federation of local, state, and national trade associations whose 
membership at its height was reported as over 600,000, and then, 
during the succeeding depression following 1873, to throw back their 
constituents into disorganization, secret unions, or criminal aggression. 

This agitational period of the sixties and seventies pointed to 
what, during the halting prosperity of the eighties, may be truly 
designated as the Great Upheaval. For, never before had organization 
reached out so widely or deeply. New areas of competition, new 
races and nationalities, new masses of the unskilled, new recruits 
from the skilled and semi-skilled, were lifted up temporarily into what 
appeared to be an organization, but was more nearly a procession, so 
rapidly did the membership change. With three-fourths of a million 
members on the books of the Knights of Labour at the height of its 
power, a million .or more passed into and soon out from its assemblies. 
Finally is a more constructive period slowly developing before us. 
Withdrawing from the weaker elements of unskilled and semi-skilled, 
the skilled trades began building up stable and nation-wide organiza¬ 
tions, and winning such recognition from employers’ associations 
that they were able to establish more or less enduring systems of trade 
agreement, and to retain their membership during a period of depres¬ 
sion. At the same time, the recurring problem of the unskilled is 
again threatening an upheaval. 

These several historical periods have produced, not only character¬ 
istic movements but also characteristic arguments. Thus the argu¬ 
ments and pleas for a reduction of hours of labour started off with 
the citizenship view of securing more leisure; then came the human¬ 
itarian horror of helpless exhaustion; then in the fifties, the older 
trade union philosophy of making work; then in the sixties, the newer 
trade union philosophy of the standard of living; then the opportu¬ 
nistic bargaining of the trade agreement; finally the philosophy of the 
police power of the state based on the actual facts of the degree of 
menace to health. 


AMERICAN TRADE UNIONISM 


537 


As long as the wage-earning class accepts the existing order and 
merely attempts to secure better wage bargains, its goal must eventu¬ 
ally be some form of the “trade agreement,” which recognizes the 
equal bargaining rights of the organized employers. Its union is not 
“class conscious” in the revolutionary sense of socialism, but “wage¬ 
conscious” in the sense of separation from, but partnership with, 
the employing class. On the other hand, in recent times, a revolu¬ 
tionary unionism has appeared, seeking by means of the strike of all 
employees regardless of trade differences, by the rejection both of 
politics and agreements with employers, and by concerted damage to 
the employers’ property, to overthrow the capitalist. Taking the 
name “syndicalism” from the French for “unionism,” it indicates 
the same split in trade unionism as that which in the seventies separated 
out anarchism from socialism. Syndicalism is “class conscious” 
unionism, rather than “wage conscious,” its object is revolution 
rather than the existing order, conquest rather than trade agreement, 
and, at the same time, anarchism rather than socialism. Back and 
forth between the socialistic and anarchistic doctrines has the labour 
movement swung, according to periods, conditions, and leaders. 
Political movements, too, have changed in character, and with them 
the significance of the word politics. They differ from trade unionism 
in that, under the system of majority elections, they usually require 
coalition with other classes, whereas a union can act independently 
as a minority, without the consent of others. The first attempt to 
form a “labour party” in the early thirties resulted rather in a party 
of the “producing classes” as against the “aristocracy” or capitalist 
classes. It was not until the trades’ unions of the middle thirties 
and their rejection of politics that wage-earners as a class separated 
themselves definitely in the larger cities from their employers. The 
political movements that followed were again mainly coalitions with 
the farmers, and only as the various socialist parties began to rise after 
the sixties, did politics take on a strictly wage-earning form. Mean¬ 
while, from time to time, a kind of trade union politics appeared, not 
revolutionary in the socialistic sense, but directed to the narrower 
object of relieving unions from the pressure of legislatures and courts 
controlled by hostile employers. In this way political movements 
have reflected the evolution of classes and policies, ranging all the way 
from the individualistic politics of small capitalists or wage-earners 
seeking to become capitalists, to the opportunistic politics of trade 
unions and the revolutionary politics of socialism or anarchism. 


538 THE WORKER IN MODERN ECONOMIC SOCIETY 


4. THE KNIGHTS OF LABOR 

a) ORIGIN OF KNIGHTS OF LABOR 1 

The tailors of Philadelphia had had a strong organization. The 
cheap work by which government contracts had been filled for army 
supplies had undermined the standards of the trade and the Garment 
Cutters Union was losing ground. When the final vote had been taken 
which accomplished the dissolution of the union, some of the more 
far-sighted members immediately took up plans for a better type of 
unionism. The leader of this group was Uriah S. Stevens, who became 
the founder of the new society. In 1869 the new relations were 
assumed and in 1871 the name, the Noble Order of the Knights of 
Labor, was adopted. The membership was at first limited to tailors. 
Soon others were admitted as associate members and after they became 
familiar with the aims were permitted to organize new societies 
among their respective trades. These were known as assemblies. 
The parent assembly became Assembly No. 1 and the others were 
numbered serially. Before the end of 1873 there had been formed 
eighty assemblies in various trades, some in territory outside of 
Philadelphia and by the close of 1876 there were over one hundred. 

When five assemblies had been formed it appeared necessary to 
have some authority uniting them. At first there was established a 
Committee on the good of the Order made up of three from each local. 
Assembly No. 1 retained its prestige and was practically the center 
of influence and authority. By 1873 this temporary committee gave 
way to a delegated body known as the District Assembly. With the 
increase of local assemblies, other district assemblies were formed 
designated numerically, as were the locals. The parent local of which 
Stevens was the Master Workman together with the other early ones 
formed District Assembly No. 1 with Stevens at its head. The 
increase of district assemblies led to the establishment of a national 
union. In 1878 this was consummated in a General Assembly with 
delegates from seven states representing fifteen trades. Stevens was 
chosen first Grand Master Workman. The year following delegates 
assembled from thirteen states. After that time conventions were 
held annually. Thus the new society grew on its organization side. 
Its membership increased with unparalleled rapidity. By 1883 the 
membership stood at 52,000. 

1 Adapted with permission from G. G. Groat, An Introduction to the Study of 
Organized Labor in America, pp. 78-81. (The Macmillan Co., 1917.) 


AMERICAN TRADE UNIONISM 


539 


Its form .—The local assemblies constituted the organization. 
These locals were composed sometimes of one trade and sometimes 
of several. It was not, strictly speaking, a trade society. The earlier 
locals were usually of a single trade while the ones formed later 
were more generally mixed. There were some instances of locals 
composed entirely of women, though it was not till 1881 that women 
were admitted to membership. The membership was made up 
generally of wage earners, however. Skilled and unskilled alike were 
accepted. In 1886 a mixed assembly in Chicago had as its “Master 
Workman” a woman. Colored workmen were first organized in 
assemblies in 1883 and for a few years this class of membership 
increased rapidly. A later regulation declared that at least three- 
fourths of the membership of new locals must be of the wage-earning 
class. The membership, open as it was, was not without limitation. The 
age limit was sixteen for unions already established but for new locals 
the membership must be entirely of those over eighteen years of age. 
A further restriction appears in the following section of the constitution 
of locals. “No person who either sells or makes a living, or any part 
of it, by the sale of intoxicating drink, either as manufacturer, dealer 
or agent, or through any member of the family, can be admitted to 
membership in this order, and no lawyer, banker, professional gambler 
or stock broker can be admitted.” Prior to 1881 physicians also 
were excluded. 

The district assemblies were formed sometimes on the basis of 
trade groups and in other cases the geographical bond united them. 
The General Assembly is a delegate body representing the entire 
membership. 

The policy of the strike prevailed during the years between 
1878 and 1883, after which opinion changed. The constitution 
governing local assemblies was modified. “ Strikes should be avoided 
whenever possible. Strikes, at best, only afford temporary relief; 
and members should be educated to depend upon thorough organiza¬ 
tion, co-operation, and political action, and, through these, the 
abolishment of the wage system. Our mission cannot be accomplished 
in a day or a generation. Agitation, education, and organization are 
all necessary.” In the establishment of an assistance fund the Order 
was particularly careful to guard against the use of this money for 
strikes. “We declare,” read this section of the constitution, “that 
strikes are deplorable in their effect and contrary to the best interests 
of the order.” Thus was brought to an end the possibility of a 


540 


THE WORKER IN MODERN ECONOMIC SOCIETY 


strike that had behind it the support of the Order as a whole. “ We 
must teach our members that the remedy for the redress of wrongs 
we complain of does not lie in the suicidal strike; but it lies in thorough 
effective organization. Without organization we cannot accomplish 
anything; through it, we hope to forever banish that curse of modern 
civilization,—wage-slavery, ’ 5 

Probably no society has ever looked out upon a more brilliant 
future than did the Noble Order of the Knights of Labor as it completed 
its organization with the General Assembly at its head. Its aims 
were noble and its ideals high. 

Its decline .—The decline in the influence of this society was no 
less striking than its rise. Within but a few years more than it had 
taken in building up its wide influence this had been lost, its member¬ 
ship declined, and though it still maintains its existence, it does so, 
to state it in the words of Professor Commons, as “a bushwhacking 
annoyance on the heels of its successor.” One of the elements of 
weakness in the Knights was its dual organization in a trade. During 
the last quarter of the nineteenth century the trade assemblies were 
forming on national lines. The Knights recognized these as important 
and sought to incorporate them. In 1887 there were in the Order as 
many as twenty-two national trade assemblies. These existed side 
by side with the labor assemblies making a dual organization. This 
proved undoubtedly to be an element of weakness. From 1886, the 
year that registered the largest membership among the Knights, 
when over 700,000 members were enrolled, the decline in numbers 
and influence was steady. The causes for this have been stated in 
various forms and as of differing importance. They may be summed 
up as four in number: (1) The failure of expensive sympathetic 
strikes in which the Order became involved in spite of its professed 
disapproval of such acts in its later years. (2) Activity in political 
affairs. This was of course the result of experience and there was an 
abundance of precedent in favor of political action. It did not bring 
strength to the Order, however. (3) The presence of the two distinct 
forms of organization mentioned above, the mixed labor assembly 
and the national trade assembly. These proved to be factors that 
undermined rather than built up the strength of the Order. (4) 
The overcentralization of power in the hands of the general officers. 
The promoters of the first assembly guarded very jealously their 
leadership. They were the source of authority. This relation 
generated restlessness and suspicion in the place of strength. * 


AMERICAN TRADE UNIONISM 


541 


b) THE KNIGHTS OE LABOR AND THE AMERICAN FEDERATION 

OF LABOR 1 

From its beginning the Knights of Labor developed along lines 
unmistakably opposed to the traditional principle of trade unionism, 
viz., trade autonomy. It placed in the hands of the General Assembly 
“full and final jurisdiction in all matters pertaining to the local and 
district assemblies.” The district assembly in turn possessed power 
within its district “ to decide all appeals and settle all controversies 
within or between local assemblies.” 

The Federation of Organized Trades and Labor Unions of the 
United States and Canada was formed in 1881. In the first congress 
of the new federation, the local assemblies of the Knights of Labor and 
the trade union were both represented, and it was understood that 
each should maintain its own organization and work in harmony 
with the other for the federation of all labor units. , But when the 
respective positions of the two federations became more sharply 
defined, radical differences appeared. In principle there was no 
inherent antagonism, since the work of one might very well have 
supplemented that of the other, but in practice disagreements con¬ 
stantly arose. 

The two organizations differed much in government and structure. 
The local assembly of the Knights had as its primary concern the 
interests common to all productive workers, and not the interests of 
a craft. The “mixed” assembly sought to gather into one association 
all branches of honorable toil, without regard to nationality, sex, 
creed, or color. This principle guided the organizers in their field 
work, and was largely responsible for the remarkable growth of the 
order in the next few years. 

On the other hand, the primary unit in the system of organization 
upheld by the Federation of Labor was the local union, composed of 
artisans following a single vocation, and attached commonly to a 
national trade union. The founders of the Federation accepted the 
abstract principle of a common labor cause advanced by the Knights, 
but held that the mechanism through which the interest of all could 
best be promoted was the craft union. The opponents of the autono¬ 
mous system claimed that the trade union seeks exclusive privileges 
in its particular field at the expense of those engaged in other branches 
of industry. Although these differences marked in general the broad 

1 Taken with permission from William Kirk, in J. H. Hollander and G. E. 
Barnett, “Studies in American Trade Unionism ,” pp. 354-80. (Henry Holt & Co.) 


542 


THE WORKER IN MODERN ECONOMIC SOCIETY 


distinction between the two federations, in special cases they faded 
away. For instance, it was common to find a local assembly of the 
Knights of Labor composed exclusively of workmen of one trade 
wherever conditions were unfavorable to the mixed assembly. Simi¬ 
larly the organizers of the American Federation oftenfound it necessary 
to form into one local union workers of miscellaneous crafts. “ Federal 
Labor Unions,” analogous in composition to the mixed assemblies of 
the Knights, were organized in those localities where numbers did 
not justify the existence of trade unions. As soon, however, as a 
sufficient number belonging to one craft was gathered together, a 
new local trade union recruited from the membership of the mixed 
union was formed. The trade local in turn joined the national union 
of its craft wherever the chance presented itself. 

The difference noted in the primary divisions appeared to a larger 
extent in the federate grouping. The district assembly, comprising 
the local assemblies of the Knights of Labor in a given locality, corre¬ 
sponded structurally to the central labor union. Before the Knights of 
Labor movement, the life of these central organizations was ordinarily 
brief. After a stormy experience of personal jealousies, political 
affiliations, and trade jurisdiction disputes, such associations commonly 
fell apart. As the Knights of Labor grew, however, many of these 
weak central labor unions were reorganized as district assemblies with 
large powers. 

As each organization persisted in its efforts to include all wage- 
earners, the circle of activity intersected, with the consequence of dual 
authority on the part of the federations and divided loyalty on the 
part of the individual members. The American Federation, from the 
beginning, resolutely opposed dual organization in any trade. It 
claimed that if an exception were made in favor of the Knights of 
Labor assemblies, a dangerous precedent would be established and the 
existence of trade autonomy imperiled. The Knights of Labor, on the 
other hand, having in mind the absolute control which the General 
Assembly had over all branches in case of dispute, were anxious to 
secure as members, persons already belonging to local and national 
trade unions. The Bricklayers’ Union voiced the sentiment of the 
trade unionists: “We claim that any district assembly of Knights of 
Labor masons, in or near a locality where a branch of our organization 
exists, is a direct injury to the advancement of our craft, for we claim 
arid demand that all men following a distinct calling having a national 
or international trades union in existence should be required to join the 


AMERICAN TRADE UNIONISM 


543 


order of his calling and no other.” The disputed questions were dis¬ 
cussed at repeated conferences, the American Federation adhering 
throughout to its original stand against dual affiliation. The American 
Federation of Labor promised in 1889 that should the Knights of Labor 
“discountenance and revoke the charters of all trade assemblies or dis¬ 
tricts within the Order, the Federation would agree to urge its members 
and all working people to become members of mixed assemblies of the 
Knights of Labor.” The adoption of this plan would have given the 
national unions, affiliated with the Federation, complete control 
over their respective fields in all trade matters, and would have left 
to the local and district assemblies of the Knights of Labor the work 
of intellectual, social, and political improvement. In other words, 
the Knights of Labor, divested of all trade authority, would have 
become the central reform bureau of the labor movement. The 
Knights of Labor, however, refused to accept the terms proposed and 
the Federation decided at the annual convention of 1894: “No 
meeting or conference with the Knights of Labor officials shall 
be held until they declare against dual organization in any one 
trade.” 

The opposed principles of the two organizations met sharply in a 
single issue—the mutual recognition of working cards. The matter 
was vital to each organization. If the Federation did not recognize the 
mixed assemblies of the Knights as bona fide locals, then the members 
were not union men and could not work with union men in closed 
shops. On the other hand, if the working card of the Knights of 
Labor were respected by the trade unions, the Knights’ members 
by that act gained status as union men, and the Federation practically 
lost its fight for trade autonomy. In 1886, the Knights of Labor 
proposed the mutual exchange and recognition of working cards— 
“ the card of any member of the Order admitting him to work in any 
union shop, and the card of any union man admitting him to work in 
any Knights of Labor shop.” The Federation of Labor refused. 

The unfavorable attitude of the Federation meant little to the 
Knights in 1886 when the Order was strong and influential. With 
the growth of the trade union spirit within the Order and the cor¬ 
responding decline of the mixed assembly, the question became more 
serious. No adjustment or compromise was ever reached. 

From this review of the structural differences between the two 
federations, attention can now be turned to a comparison of their 
policies with respect to ( a ) the union label, ( b ) co-operation, 


544 


THE WORKER IN MODERN ECONOMIC SOCIETY 


(c) strikes and boycotts, (d) the reduction in the length of the working 
day, (e) politics and legislation. 

The union label .—The union label was first used by a local cigar 
makers’ union in San Francisco in 1874 to distinguish American-made 
cigars from the work of Chinese competitors. Unfortunately, how¬ 
ever, while the Cigar Makers’ Union had adopted a blue label, the 
Knights of Labor, wishing a distinctive mark, chose a white cigar label 
to circulate side by side with the blue label of the Union. Largely as a 
result of this policy harmony soon gave way to bitter rivalry and open 
conflict. The general principle at issue in the controversy was the 
right of the Knights of Labor to organize whom they pleased. It was 
claimed that early in 1886, during a lockout by manufacturers in 
New York City certain cigar factories involved had been organized 
by the Knights of Labor. Notwithstanding a promise made by the 
general executive board of the Order to investigate the charges and 
to revoke the charter of the offending assembly if the statements 
proved correct, the Cigar Makers ordered a boycott against all cigars 
bearing the label of the Knights and endeavored in every possible 
way to discredit the Order. In retaliation, the General Assembly 
adopted a resolution ordering all employees in the cigar trade, who 
were members both of the Knights of Labor and of the Cigar Makers’ 
International Union, to withdraw from the Union or leave the Order. 
This resolution marked a turning point in trade-union history in 
that it gave a determining impetus to the movement already strong 
from the Knights of Labor assembly in the direction of the autonomous 
trade union. The Order discovered its mistake as soon as the conven¬ 
tion of 1886 had adjourned, and at the following convention endeav¬ 
ored to correct the error. “Resolved, That members expelled from 
the Order because of belonging to the Cigar Makers’ International 
Union be reinstated without paying initiation fees or back 
dues.” 

Throughout the controversy the Federation of Labor exerted its 
influence in favor of the union. If the Federation had recognized 
the label of the Knights of Labor, the Order would have been virtually 
granted full rights as a union, and vested with co-ordinated authority 
in the conduct of trade matters. The proposed “treaty” of 1886 
contained the provision that “ the Knights of Labor shall not establish 
or issue any trade mark or label now issued, or that may hereafter 
be issued by any national or international trade union.” The Knights 
of Labor, however, regarded itself as a pioneer in the use of the label 
and refused to part with its independent use. 



AMERICAN TRADE UNIONISM 


545 


Co-operation .—It is clear that the founders of the Knights of Labor 
conceived an ultimate industrial system in which workmen should be 
their own employers. For inaugurating the co-operative common¬ 
wealth, the structure of the Knights of Labor was far superior to 
that of the rival federation. The mixed assembly comprised men in 
many walks of life, and largely controlled demand as well as produc¬ 
tion. If a trade local embarked in a co-operative enterprise only a 
limited number of consumers were directly concerned; but when a 
mixed local in a community organized into Knights of Labor assemblies 
ventured on independent production, the collection patronage affiliated 
therewith assured a market. Experiments in co-operative stores, 
factories, and institutions, were reported in 1882 from seventeen 
localities of the one hundred represented; in 1887, the general 
co-operative board announced that light halls and buildings were 
owned, and that eleven newspapers and fifty-four workshops, factories, 
etc., were engaged in productive co-operation. The general result of 
such ventures was, however, disappointing. Probably the chief cause 
of failure was the lack of business experience. 

Strikes and boycotts .—The Knights of Labor in principle stood 
consistently for the arbitration with employers of all grievances. 
In the event of arbitration failing, the boycott was regarded as the 
most effective weapon of labor. The same width of organization 
that facilitated the distribution of co-operative products enabled 
the Knights to make effective use of the boycott. Designed as a 
temporary expedient, this device was regarded as more effective than 
the strike, without involving the suffering attendant upon all pro¬ 
tracted struggles. In the use of the boycott, the inter-trade form of 
labor organization enjoys a peculiar advantage. A trade union in 
any locality may cease purchasing an article without appreciably 
reducing its sale; but an assembly of the Knights of Labor in the 
vicinity wielded an influence proportional to the purchasing power 
of all the members interested. More important still, under the 
centralized power by which the General Assembly controlled the 
subordinate divisions, the observance of a boycott might be strictly 
enforced on all members. 

As the Order came, with its growth, more and more into touch with 
practical affairs, periodic strike fevers swept over the membership 
and strike regulations became necessary. 

The new strike spirit did not confine itself to inaugurating trade 
or local strikes. Strong influences were at work to convert the Order 
into an aggressive and militant organization. Accepting the motto, 


546 


THE WORKER IN MODERN ECONOMIC SOCIETY 


“An injury to one is the concern of all,” in the literal sense, the 
newly initiated element sought to widen the area of every strike by 
ordering out all employees of an offending employer. The Knights 
of Labor were well organized for undertakings of this character, 
controlling as they did all trades, and vesting in the General Assembly 
the right to order all subordinate divisions on strike whenever the 
situation justified such action. The disastrous end of the strike on 
the Missouri Pacific railroad system in 1886 brought the advocates 
of sympathetic strikes into discredit. 

The American Federation of Labor has from the outset regarded 
strikes as the necessary means to gain trade union ends under a system 
of capitalistic production. Being merely an advisory centre, and 
depending upon the support of trade unionists working through their 
respective national unions, the Federation lacks the power to control 
strikes, so prominent in the Knights of Labor. Consequently, the 
Federation has followed a conservative course and has acted only as 
a source of moral and financial support to the national unions involved. 
It claims no power to call sympathetic strikes. 

Reduction in the length of the working day .—-In the original platform 
of the Knights of Labor, one of the most prominent of the expressed 
aims of the Order was “The reduction of the hours of labor to eight 
per day, so that the laborers may have more time for social enjoyment 
and intellectual improvement, and be enabled to reap the advantage 
conferred by the labor-saving machinery which their brains have 
created. ’ Although the Knights possessed a system of government 
well adapted for general movements, they never formulated a definite 
plan for the inauguration of the eight-hour day. 

Politics and legislation .—The Knights of Labor and the American 
Federation of Labor have both recognized the advantages that a 
federation of trades has over separate trade unions in any reform move¬ 
ment involving political activity, and have shaped their respective 
policies accordingly. The two organizations have, however, employed 
different methods. The Knights of Labor as an organization was 
designed in the belief that the general interests of the labor world 
transcend the interests of particular crafts. Since general interests 
can be best promoted by political action, the Knights laid greater 
stress on political activity and aimed to bring into existence ultimately 
a labor party. On the other hand, the Federation holds that the 
best way to promote general aims is by each trade seeking zealously 
its own interests. 


AMERICAN TRADE UNIONISM 


547 


The Knights of Labor, as a secondary interest, endeavored to 
forward labor legislation. Among the most important reforms 
advocated by the Knights were direct legislation, the initiative and 
referendum, bureaus of labor statistics, abolition of the contract 
system on national, state, and municipal works, compulsory arbitra¬ 
tion, prohibition of child labor under the age of fifteen, and government 
ownership of telegraphs, telephones, and railroads. 

c) THE NEGOTIATIONS BETWEEN THE KNIGHTS AND TRADE 

UNIONISTS IN l886 

i. The Proposal of the Trade Unions 1 

The conference stated, “We hold that the trade unions should 
strictly preserve their distinct and individual autonomy, and we do not 
deem it advisable for any trade union to be controlled by or to join 
the Knights of Labor in a body, believing that trades unions are best 
qualified to regulate their own internal trade affairs. There need be 
no fears of their [the trades unions’] destruction, nor need there be any 
antagonism between them and the Knights of Labor.” The last 
conclusion, though it may have been in strict conformity with abstract 
logic, went, nevertheless, contrary to the concrete logic of the situa¬ 
tion. The trade unions could hardly expect that the Knights of Labor 
at a critical period such as this, when the fate of their movement was 
hanging in the balance, could allow the skilled men to remain within 
the narrow circle of their special trade interests. It was, therefore, 
a matter of natural sequence that, using the words of the resolution 
passed by the conference, it became “ the avowed purpose of a certain 
element of the Knights of Labor to destroy the trades unions.” 

But though the trade unions seem to have failed to grasp the nature 
of the class struggle conducted by the Knights of Labor, and, therefore, 
viewed the latter merely as an encroaching organization, no one can 
deny that they were acting within their right when they strenuously 
opposed the policy of forcible assimilation applied by the Knights of 
Labor. The proposed treaty of peace drawn up by the conference 
as the basis for future negotiations read as follows: 

“First, That in any branch of labor having a national or inter¬ 
national organization, the Knights of Labor shall not initiate any 
person or form any assembly of persons following said organized craft 
or calling without the consent of the nearest national or international 
union affected. 

1 Adapted with permission from John R. Commons and associates, History of 
Labour in the United States, pp. 404-5. (The Macmillan Co., 1921.) 


548 THE WORKER IN MODERN ECONOMIC SOCIETY 


“ Second, That no person shall be admitted to the Knights of Labor 
who works for less than the regular scale of wages fixed by the union 
of his craft, and none shall be admitted to membership in the Knights 
of Labor who have ever been convicted of ‘scabbing,’ ‘ratting,’ 
embezzlement or any other offence against the union of his trade or 
calling until exonerated by the same. 

“Third, That the charter of any Knight of Labor Assembly of any 
trade having a national or international union shall be revoked and the 
members of the same be requested to join a mixed assembly or form a 
local union under the jurisdiction of their respective national or 
international trades unions.” 

ii. The Proposal of the Knights 1 

To the Officers and Members of all National and International Trades- 
Unions of the United States and Canada, Greeting :— 

Brothers in the Cause of Labor:—We, the Knights of Labor, in 
General Assembly convened, extend our heartiest greeting to all 
branches of honorable toil, welcoming them to the most friendly 
union in a common work. 

This organization embraces within its folds all branches of honor¬ 
able toil, and all conditions of men, without respect to trades,occupa¬ 
tion, sex, creed, color, or nationality. 

We recognize the service rendered to humanity and the cause of 
labor by trades-union organizations: but believe that the time has 
come, or is fast approaching, when all who earn their bread by the 
sweat of their brow shall be enrolled under one general head, as we 
are controlled by one common law—the law of our necessities; and 
we will gladly welcome to our ranks, or to protection under our banner, 
any organization requesting admission. And to such organizations 
as believe that their craftsmen are better protected under their present 
form of government, we pledge ourselves, as members of the great 
Army of Labor, to co-operate with them in every honorable effort 
to achieve the success which we are unitedly organized to obtain; 
and to this end we have appointed a special committee to confer with 
a like committee of any national or international trades-union, which 
shall desire to confer with us on the settlement of any difficulties 
that may occur between the members of the several organizations. 

The basis upon which we believe an agreement can be reached 
would necessarily include the adoption of some plan by which all 

1 Adapted with permission from The Labor Movement: The Problem of Today , 
edited by George E. McNeill, pp. 423-24. (A. M. Bridgman & Co., 1887.) 


AMERICAN TRADE UNIONISM 


549 


labor organizations could be protected from unfair men—men expelled, 
suspended, under fine, or guilty of taking places of union men, or 
Knights of Labor while on strike or while locked out from work; 
and that as far as possible a uniform standard of hours of labor 
and wages should be adopted, so that men of any trade, enrolled in 
our Order, and members of trades-unions may not come in conflict 
because of a difference in wages or hours of labor. We also believe 
that a system of exchanging working-cards should be adopted, so 
that members of any craft, belonging to different organizations 
could work in harmony together—the card of any member of this 
Order admitting men to work in any union shop, and the card of any 
union man admitting him to work in any Knights of Labor shop. 

5. THE AMERICAN FEDERATION OF LABOR 

a) GENERAL NATURE 1 

The international unions, chartered by the Federation, are given 
jurisdiction over organization within prescribed trade or industrial 
lines. 

These international unions in turn issue charters to local unions, 
giving them the right to organize the workers within a prescribed 
locality, coming under the jurisdictional provisions of the international 
charter. A local union is known by a number, as Local Union 25 
of the International Ladies’ Garment Workers. The local unions 
pay a per capita tax in support of the international unions. 

The laws governing the election of officers, the duties of officers, 
the holding of conventions, the fixing of dues and initiation fees, 
the terms of contracting or bargaining with employers, as well as 
organization actually accomplished, are determined by each inter¬ 
national union. Once in possession of the charter , the autonomy of an 
international union is complete , so long as it does not encroach on 
territory assigned another international. 

Within its assigned field it may organize every worker or it may 
lie down on its job. .The Federation, by its own laws, may grant no 
other group of workers a charter in the same field so long as the 
original organization observes the requirements of its charter, and 
pays its per capita tax. It considers any other group which operates 
in the same field, a “dual,” that is, a rival organization, and inimical 
to the interests of unity. The character of the internationals varies 
as to method and forms, as well as to principles of action. 

1 Adapted with permission from Helen Marot, American Labor Unions, pp. 
16, 21. (Henry Holt & Co., 1914.) 


55° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


While this allowance for differences in policy gives each inter¬ 
national organization full opportunity for individual expression, the 
American Federation, according to its own constitution, has no power 
to check the domination of the international unions over their own 
local unions. 

There are also local unions affiliated directly with the Federation 
without allegiance to an international union. In trades where no 
internationals exist, the Federation grants charters to organizations 
of eleven or more workers of a trade in one locality. These are also 
called local unions. When seven or more of these locals desire 
consolidation, they make application to the Federation, which with¬ 
draws the individual charters and issues a charter to an international 
union, which re-issues individual charters to the locals which formed it. 

In localities where there are not enough wage-earners in any one 
trade to organize as a local trade union, or where there are not enough 
who desire organization, workers of miscellaneous trades are grouped 
together in what the Federation calls Federal Labor Unions. 

For many years the strength of the American Federation has 
been sapped by what are commonly known as jurisdiction fights. 
The international unions are still appealing to the Federation, which 
prescribes the boundaries of each, to decide on the question of disputed 
territory. 


AMERICAN TRADE UNIONISM 


551 


b) STRUCTURE 1 
CHART J 



1 Taken from the Report of the Proceedings of the Forty-first Annual Convention 
of the American Federation of Labor , 1921, p. 30. 














552 


THE WORKER IN MODERN ECONOMIC SOCIETY 


5. THE RAILWAY BROTHERHOODS 

a) ORGANIZATION AND POLICIES 1 

There are unions of railroad workers which are a part of the Ameri¬ 
can Federation of Labor, such as the car builders, shop and road buil¬ 
ders and repairers, telegraphers, machinists, and, in a limited district, 
switchmen. But the most important unions of railroad workers are 
independent of the American Federation and represent a distinct 
type of labor organization. These unions are: the Brotherhood of 
Locomotive Engineers, the Brotherhood of Locomotive Firemen and 
Enginemen, the Brotherhood of Railway Trainmen, which includes 
conductors, baggagemen, brakemen, flagmen, switchmen in yard and 
train service, and the Order of Railway Conductors. 

The brotherhoods were organized originally, not as labor unions, 
but as mutual insurance societies. Railroad employment is listed as 
extra hazardous by some of the insurance companies. It has been 
estimated that the cost of insurance of railroad workers charged by 
the ordinary insurance companies is more than 30 per cent above 
that charged by the brotherhoods. This estimate would be much 
higher than it is, had the difference between the rates which the 
regular insurance companies would charge for insurance against 
disability been taken into consideration. Disability even more than 
death brings disaster to the homes of men in railroad service. 

The brotherhoods have managed their insurance business with 
great skill. Many millions of dollars have been paid out from their 
insurance funds, and life in times of greatest stress has been made more 
endurable for thousands of men and their families. 

The large membership of the brotherhoods is unquestionably due 
to the insurance features of the organization, rather than to the 
collective bargaining, or the “protective features,” as they call their 
trade agreements, which were introduced in the early years of organiza¬ 
tion. 

Their first efforts to change their wage conditions through their 
organizations were met with bitter and unrelenting opposition by the 
management of the roads. The Firemen, for example, adopted the 
“protective policy” in 1879, two years after the organization of their 
insurance business. They were forced to abandon it after a brief 
experience on account of the opposition of the railroad management. 
In 1885 they reintroduced the policy of collective bargaining, and have 
continued ever since to develop it. 

1 Adapted with permission from Helen Marot, American Labor Unions , pp. 
29-35. (Henry Holt & Co., 1914.) 


AMERICAN TRADE UNIONISM 


553 


While the insurance features of the brotherhoods have protected 
members, they are also responsible for the unfailing conservatism of 
the organizations. A member who has invested in a policy and has 
carried that policy for several years and is counting on its protection 
is wary of strikes or other experiments involving risk. It is well 
recognized that trade union officials who are the trustees of large 
benefit funds or insurance features of unions are more sensitive to a 
disturbance of the treasury than to the economic position of their 
members or their relation to their employers. 

The insurance features are used as disciplinary weapons by the 
organization. Men who strike without the sanction of the organiza¬ 
tion in which they are insured and hold membership are expelled 
from the Brotherhoods of Trainmen and Firemen. On the other 
hand, in no one of the organizations can a man retain membership 
who has scabbed in an authorized strike. 

The avoidance of strikes is a business principle of the brotherhoods. 
It has also become a virtue and a social responsibility assumed by 
the officers. The taking of a strike vote is a part of the required 
preparation for arbitration proceedings, as explained elsewhere. 

b) IMPORTANT COMMON FEATURES OF THE BROTHERHOODS 1 

Organization among railroad employees did not begin until after 
i860. The engineers were first in the field, forming, in 1865, the 
Brotherhood of the Footboard. A year later this name was changed 
to the Brotherhood of Locomotive Engineers, the title by which the 
union is still known. Five years later the conductors formed the 
organization which eventually was to develop into the Order of 
Railway Conductors of America. The Brotherhood of Locomotive 
Firemen and Enginemen was formed in 1873, and the Brotherhood 
of Railroad Trainmen in 1883. Subsequently unions were started 
among other railway employees, including the switchmen, carmen, 
trackmen, machinists and telegraphers, but no one of these organiza¬ 
tions has attained the degree of power and prestige enjoyed by the 
four principal unions. 

These four brotherhoods have important features in common: 

1. Each union includes practically all the men employed in its 
field. The Trainmen, with 134,000 members; the Engineers, with 
73,000; the Firemen, with 91,000, and the Conductors, with 49,000, 
comprise respectively 65 per cent, 90 per cent, 75 per cent, and 90 

1 Taken with permission from E. C. Robbins, The Railway Conductors, 1914, 
pp. 10, 11. (Columbia University Studies.) 


554 


THE WORKER IN MODERN ECONOMIC SOCIETY 


per cent of all the men in these four occupations employed by the 
steam railroads of the country. 

2. The work of conductors, engineers, firemen and trainmen is 
similar in many respects. It requires physical endurance, mental 
alertness and a capacity for responsibility unusual in ordinary indus¬ 
trial pursuits. An apprenticeship of several years is required for 
proficiency in any of these four lines of work. This condition, com¬ 
bined with the responsibility devolving on the railroad for the safe 
transport of passengers and goods, makes it exceedingly difficult for 
a company to fill the places of these employees in case of a strike or 
lockout. So unique, in fact, is the position of the four railway 
brotherhoods in this regard, that they have persistently refused to 
affiliate themselves with any of the larger labor federations, such as 
the American Federation of Labor, on the ground that such an 
alliance would be of little benefit, while it might embroil them in 
needless sympathetic strikes and boycotts. 

3. Each of the four unions has extended its jurisdiction throughout 
the entire continent, and has been successful in withstanding the 
encroachments of rival organizations both in the United States and 
Canada. 

4. All four unions deprecate the use of the sympathetic strike and 
all are advocates of the open shop; that is, they do not insist upon the 
exclusive employment of union members. 

5. In addition to trade activities proper, much emphasis is placed 
by them on fraternal and benevolent features, all conducting life- 
insurance associations for the benefit of their members. 

7. THE AMALGAMATED CLOTHING WORKERS 1 

The Amalgamated Clothing Workers really originated in 1910 
in a spontaneous strike of 40,000 hitherto unorganized workers in the 
men’s clothing industry of Chicago. The strikers affiliated with the 
United Garment Workers but became dissatisfied with the manner 
in which that organization conducted the strike. The strike was 
lost, save in the shops of Hart, Shaffner, and Marx, where a joint 
method of settling disputes was set up. 

In New York, the men’s clothing workers also effected an organiza¬ 
tion. These newer unionists were in the main Jewish and were 
believers in socialism and industrial ynionism. In 1914, a split 
occurred between the old and the new elements in the United Garment 


1 Prepared. 


AMERICAN TRADE UNIONISM 


555 


Workers. The latter set up a separate organization which was 
refused recognition by the American Federation of Labor. The new 
organization was then named the Amalgamated Clothing Workers. 
The chief strength of the organization remained for some years in 
Chicago but during 1918 and 1919 they succeeded in organizing 
practically all the men’s clothing centers of the country and in secur¬ 
ing collective agreements. Their membership in 1920 was approxi¬ 
mately 150,000. 

The Amalgamated is a preculiarly interesting union in that it is 
composed mainly of the newer immigration, is organized on an indus¬ 
trial basis, and combines a radical social philosophy with a constructive 
attitude toward the settling of industrial disputes and the promotion of 
production. Its preamble declares that: 

The economic organization of labor has been called into existence by the 
capitalist system of production, under which the division between the 
ruling and the ruled class is based upon the ownership of the means of pro¬ 
duction. A constant and increasing struggle is being waged between these 
two classes. In this struggle, the economic organization of labor, the union, 
is a natural weapon of offense and defense in the hands of the working class. 
But in order to be efficient and effectively serve its purpose, the working 
class must accept the principles of industrial unionism. The industrial 
and inter-industrial organization, built upon the solid rock of clear knowledge 
and class consciousness, will put the organized working class in actual control 
of the system of production and the working class will then be ready to take 
possession of it. 

The Amalgamated has in practice shown itself willing to make and 
keep agreements with employers and its officers, notably the president, 
Sidney Hillman, have thrown the weight of their influence to prevent 
stoppages and to insure efficient production. 

8. THE I.W.W. 

d) PREAMBLE TO THE CONSTITUTION OF THE INDUSTRIAL WORKERS 

OF THE WORLD (FOUNDED 1905) 

The working class and the employing class have nothing in com¬ 
mon. There can be no peace so long as hunger and want are found 
among millions of working people and the few, who make up the 
employing class, have all the good things of life. 

Between these two classes a struggle must go on until the workers 
of the world organize as a class, take possession of the earth and the 
machinery of production and abolish the wage system. 


556 THE WORKER IN MODERN ECONOMIC SOCIETY 


We find that the centering of the management of industries into 
fewer and fewer hands makes the trade unions unable to cope with the 
ever growing power of the employing class. The trade unions foster 
a state of affairs which allows one set of workers to be pitted against 
another set of workers in the same industry, thereby helping to defeat 
one another in wage wars. Moreover, the trade unions aid the 
employing class to mislead the workers into the belief that the working 
class have interests in common with their employers. 

These conditions can be changed and the interest of the working 
class upheld only by an organization formed in such a way that all 
its members in any one industry, or in all industries, if necessary, 
cease work whenever a strike or lockout is on in any department 
thereof, thus making an injury to one an injury to all. 

Instead of the conservative motto “A fair day’s wages for a fair 
day’s work,” we must inscribe on our banner the revolutionary 
watchword, “ Abolition of the wage system.” 

It is the historic mission of the working class to do away with 
capitalism. The army of production must be organized, not only 
for the every day struggle with capitalists, but also to carry on produc¬ 
tion when capitalism shall have been overthrown. By organizing 
industrially we are forming the structure of the new society within 
the shell of the old. 

Knowing, therefore, that such an organization is absolutely 
necessary for our emancipation, we unite under the following constitu¬ 
tion : 

[Some constitutional provisions of the I.W.W. follow.] 

Article VII. Sec. 3: “No member of the I.W.W. shall be an officer 
in a pure and simple trade union.” 

Article IX. Sec. 1: All officers in the I.W.W. when being installed 
into office, shall be required to give the following pledge. . I 

believe in and understand the two sentences: ‘The Working Class 
and the Employing Class have nothing in common’ and ‘Labor is 
entitled to all it produces!’” 

b) THE I.W.W. SPEAKS FOR ITSELF 1 

The I.W.W. has absolutely nothing to do with political action of 
any kind. We prohibit all such propaganda within our organization. 
We center all our attention upon a question that equally concerns 

1 Adapted with permission from What Is /.fOE. pp. 3, 4, n, 13,14, 16-19. 
(Published by the Industrial Workers of the World, 1001 W. Madison St., Chicago.) 



AMERICAN TRADE UNIONISM 


557 


everybody, namely, the economic question. The members of this 
economic movement have not their eyes riveted on the government 
buildings, like the political parties, but on the factories, the mills, 
the shops and the other places of production. 

By means of our Industrial Unions we propose to pick up the 
threads of production and distribution where they fall out of the 
impotent hands of the capitalist class and continue to produce food, 
clothing and shelter, in order that mankind may not suffer. We 
maintain that the union of workers in each establishment is the organ 
best fitted to run that establishment. When it comes to the question 
of methods the I.W.W. has perhaps been more misunderstood and 
misrepresented than in any other respect. We ourselves prefer to 
describe our methods as Economic Direct Action. What is it ? It is 
that kind of action which the workers use when they seek to attain 
control of the place of work, the factory, the mill, the shop. 

The I.W.W. also practises that form of direct action known as 
the strike and the boycott, but it is always the members who decide 
the calling of a strike or a boycott, not the officials. The I.W.W. 
prefers the strike on the job , resorting to the latter only when all 
other means have failed. The strike on the job consists in a with¬ 
drawal of efficiency calculated to force the employer to the desired 
concessions. The I.W.W. members realize that the strike off the job 
frequently turns into a prolonged fast while the employer seeks to 
fill the jobs with strike breakers, and for that reason they are loath 
to abandon the field of battle, that is the job, to the enemy. 

We hold that, in the nature of things, the economic collapse of 
capitalism will soon be followed by a political collapse. The workers 
of Russia, Sweden and Germany have twisted the governmental stick 
from the economic master, and are trying socialist governments. But 
the socialist stick is as bad as the capitalist stick. 

We know how the political administrations are built up. Voting 
and representation are on geographical lines. The citizens vote 
promiscuously in their precincts, most of them unknown to one 
another and unacquainted with the nominees. As a result we see 
a highly industrialized society like the United States largely run by 
lawyers and professional politicians. Political administrations thus 
tend to become incompetent and help to run capitalism in the ditch. 
This applies not only to capitalist administrations but also to the 
socialist ones. “Fill all the important offices with dependable 
bolsheviks irrespective of their competence,” was the order in Russia. 



558 THE WORKER IN MODERN ECONOMIC SOCIETY 


The industrial collapse of Soviet Russia was the result. Modern 
industrial society is too complex to be run by party politicians and 
political administrations. An industrial society, in order to prosper, 
must have an administration of experts in every field, i.e., an Industrial 
Administration. 

By means of the Industrial Franchise, which gives the vote to all 
useful workers in their productive capacity; by means of Industrial 
Representation, which gives us expert public servants from every line 
of human activity, and by means of the resulting Industrial Adminis¬ 
tration, we propose to anchor all power for all times to come with 
the deep layers of the people who do the useful work with hand and 
brain, so that it cannot possibly slip away from them and give rise 
to another system of class rule. 

This is truly what we mean when we speak of Industrial Democracy 
and Industrial Communism. 

c) THE ATTITUDE OF THE I.W.W. TOWARD THE A.F. OF L. 1 

The American Federation of Labor, as the alleged embodiment 
of everything “crafty,” has always been the arch-enemy of the I.W.W. 

The stress of opposition to the Federation was, of course, directed 
chiefly to its craft formation, but it also featured prominently the 
reaction against its assumption of identity of interest between employer 
and employee. One of the committees at the first convention drew 
up a comprehensive indictment of “old line trade-unionism.” “The 
A.F. of L.,” it declares, “is neither American, nor federation, nor of 
labor,” because (i) it is adapted only to such conditions as existed 
in England sixty years ago; (2) it is divided into 116 warring factions; 
(3) it discriminates against workingmen because of their race and 
poverty; (4) its members are allowed to join the militia and shoot 
down other union men in time of strike; and (5) it inevitably creates 
a certain aloofness among the skilled workmen—the “aristocrats of 
labor”—toward those not skilled. “There are organizations which 
affiliated,” Haywood asserts, “with the A.F. of L. which . . . . 
prohibit the initiation of, or conferring the obligation on, a colored 
man; that prohibit the conferring of the obligation on foreigners.” 

The craft form of organization creates three types very obnoxious 
to the industrial unionist, viz., the “aristocrat” of labor, the “union 

1 Adapted with permission from Paul F. Brissenden, The I. W. W., A Study of 
American Syndicalism, pp. 83-88. (Columbia University, 1920.) 


AMERICAN TRADE UNIONISM 


559 


scab,” and the “labor lieutenant.” By the “union scab” the indus¬ 
trial unionist means the man who continues at work at his particular 
trade when the men of an allied trade are on strike. “For instance,” 
said Haywood, “in the packing plants, the butchers’ organization was 
one of the best in the country. When they were called on strike 
they quit to a man. That is, the butchers quit; but did the engineers 
quit, did the firemen quit, did the men who were running the iceplants 
quit? They were not in the union, not in that particular union. 
They had agreements with their employers which forbade them 
quitting. The result was that the Butchers’ Union was practically 
totally disrupted.” 

Craftism is what it is, because it involves a separate binding agree¬ 
ment for each trade. These, being contracted independently by each 
craft, naturally expired at different dates, so that the several crafts in 
any given industry can never be free to act in unison. The craft idea 
tended to develop the idea of caste among workingmen, and the 
skilled were set off from the unskilled as the “aristocracy of labor.” 

“We are going down in the gutter [said Haywood] to get at the 
mass of the workers and bring them up to a decent plane of living. 
I do not care a snap of my finger whether or not the skilled workers 
join this industrial movement at the present time. When we get the 
unorganized, the skilled worker will of necessity come here for his 
own protection. As strange as it may seem to you, the skilled worker 
today is exploiting the laborer beneath him, the unskilled man, just 
as much as the capitalist is.” 

But ultimately, according to Sherman, all workers—not merely 
the groups connoted by the term “working-class”—must be grouped 
in the proposed organization. “We don’t propose [he said] to organize 
only the common man with the callous hands, but we want the clerical 
force; we want the soft hands that only get $40 a month—those 
fellows with No. 10 cuffs and collars. We want them all, so that when 
a strike is called we can strike the whole business at once.” 

A third type condemned by revolutionary unionists was the 
so-called “labor lieutenant.” This latter “mis-leader” of labor was 
the symbol of another objectionable feature of the A.F of L., viz., 
the assumption that the interests of employer and employee are 
identical or at least to a large degree compatible. It is said that 
Mark Hanna once referred to the organizers and officials of the trade 
unions as the “labor lieutenants of the captains of industry.” 


560 THE WORKER IN MODERN ECONOMIC SOCIETY 

d) THE DECLINE OF THE I.W.W. 1 

The American public has been frightened by the impressionist 
school of reporters into a tremendous overestimate of the power of 
the Industrial Workers of the World. This is the one outstanding 
fact revealed by the eighth annual convention of that organization 
held in Chicago late in September (1913). 

In spite of eight years of organizing effort and unparalleled 
advertisement, the official roll of the convention indicated that its 
present paid-up membership entitled to representation does not much 
exceed 14,000 men. 

This convention secondly brought into clearest relief the fact 
that this feeble body is in a state of organic chaos as the result of 
apparently irreconcilable internal conflict, in the present convention 
under the guise of centralization versus decentralization. It is at 
present objectively a contest virtually between the East and the West. 
The so-called decentralizers, mainly westerners, sought in the conven¬ 
tion by every conceivable means to cut down the power and authority 
of the central governing body. 

The fact is that the I.W.W. is not an organization but a loosely 
bound group of uncontrolled fighters. The I.W.W., however, is not 
only weak in membership and organic unity; it possesses, further, no 
financial resources even in a slight degree adequate to advance and 
maintain its proposed organization of the working class or to carry 
forward any consistent assault on capitalism; and, moreover, it has 
shown itself incapable of controlling for its main purposes even the 
financial resources which it does possess. Time after time the I.W.W. 
has been obliged to let slip favorable opportunities for organization 
and has lost local bodies because it could not furnish the carfare and 
meal tickets necessary to send the gospel to the workers groping in 
darkness. The whole experience of the organization has, in fact, 
proved that, short of a condition of general and desperate distress, 
progressive and permanent working-class organization requires ready 
and continuous financial support. And here lies the most vital error 
in the practical theory and calculations of the I.W.W. The American 
workmen as a body are not, and are not likely to be, in a condition of 
general and desperate distress. It is, therefore, to the unskilled and 
casual laborers alone that the I.W.W. can bring home its appeal and 
to these only that it can look for the funds to put through its organizing 
projects. It is this chronic financial distress that more than anything 

1 Adapted from Robert F. Hoxie, “The Truth About the I.W.W.,” Journal of 
Political Economy , XXI (November, 1913), 785-93. 


AMERICAN TRADE UNIONISM 561 

else has caused the dissipation of its membership after each of its 
brilliant but spasmodic efforts. 

The case is made more hopeless by the inability of the organization 
to control the little financial power it can command. This lack of 
financial control is another outcome of the decentralizing mania 
which grips the membership. The average local has not developed 
the ability to conserve its own resources. Rather than support the 
central authority and submit to its financial management, the local 
suffers its funds to be dissipated by incompetent members or stolen 
by dishonest officials. 

The I.W.W. has failed to develop and sustain a stable body of 
leaders. Moyer, Debs, Mother Jones, and others, signers of the 
original manifesto, effective leaders of the past, many of them yet 
effective leaders in other labor organizations, have all disappeared 
from the councils of the I.W.W.—nagged out, kicked out, or driven 
out by despair or disgust. This result has been in part the inevitable 
outcome of the hatred of authority which expresses itself in the 
decentralizing movement but, to no small extent, it is the product 
of a strong force of romantic idealism. In spite of the fact that 
these men will have none of the regularly constituted authority when 
it makes for strength, they are hero-worshipers and are easily led for 
the moment by the “heroes of labor.” These heroes are, in general, 
men who themselves have not involuntarily suffered at the hands of 
society but have provoked its vengeance and have constituted them¬ 
selves the personal avengers of the wrongs of the working class. 
They are the inventors of new forms of sabotage, the guerilla leaders, 
the members of “secret committees,” the provocateurs in the free- 
speech fights. 

e ) FLEETING CHARACTER OF THE I.W.W. MEMBERSHIP 1 

The I.W.W. often gives very exaggerated membership estimates. 
In 1913, when estimates ran into the hundreds of thousands, “Hoxie 
walked into the office of St. John, the General Secretary, and said, 
‘Look here, St. John, I’ve got the goods on you. You have only 
14,300 members.’ ‘You’re a liar, Hoxie,’ replied St. John, ‘we have 

14 , 3 10 -”’ 

Conservative estimates of the active membership in 1915 put it at 
15,000 distributed among 150 local unions. Not less than 2,000 locals 
were chartered and approximately 200,000 membership cards issued 
in the ten-year period 1905-1916. This indicates that only 7.5 per 

1 Adapted with permission from Paul F. Brissenden, The I.W.W., A Study of 
American Syndicalism , pp. 333-48. (Columbia University, 1918.) 


562 THE WORKER IN MODERN ECONOMIC SOCIETY 

cent of the locals chartered and of the individuals enrolled in the 

I.W.W. have remained in the organization. 

9. THE GROWTH AND EXTENT OF TRADE UNIONISM 


a) A QUARTER-CENTURY OF GROWTH IN AMERICA 1 


Year 

1897 . 

1898 . 

1899 . 

1900 . 

1901. 

T Q 02 . 

Membership 
in Thousands 

. 444 

. 497 

. 604 

. 865 

. 1,123 

. 1,374 

Year 

1909 . 

1910 . 

1911 . 

1912 . 

1913 . 

1014 . 

Membership 
in Thousands 

. 2,138 

. 2,337 

. 2,441 

. 2,701 

. 2,674 

1903 . 

. D 9 i 3 

1915 . 

. 2,568 

1904 . 

. 2,073 

1916. 

. 2,755 

1905 . 

. D 945 

I 9 U. 

. 3 , 04 i 

1906. 


1918. 

. 3,450 

1907 . 


1919 . 

. 4,096 

1908. 


1920. 

. 4,924 


b) ORGANIZATION BY INDUSTRIES IN igiO 2 

Of the 38,130,000 persons gainfully employed in industry in the 
United States in 1910, 2,116,317 or 5.5 per cent were members of trade 
unions. Of the 30,060,000 male employees 2,042,000 or 6.8 per cent 
were unionists, and of the 8,075,000 females in industry 73,800 or 
0.9 per cent were members of labor organizations. The total member¬ 
ship of trade unions was distributed among the various industries in 
the following proportions: 

1. Of the 18,262,000 persons employed in the production of 
salt, oil and natural gas, in chemical industries, button factories, oil 
refineries, rubber factories, turpentine distilleries, in the hand trades, 
in retail and wholesale trade, in agriculture, forestry, and animal 
husbandry, and in proprietary and supervisory capacities less than 
1 per cent were organized. 

2. Of the 8,819,000 persons employed in the metal industries, 
paper and pulp, textiles, charcoal, coke and gas works, as stationary 
engineers, in public, professional, domestic and personal service, 
and as clerical workers from 1 per cent to 5 per cent were organized. 

3. Of the 2,230,000 persons employed in quarries, in the production 
of foodstuffs, iron and steel, in broom and brush factories and as 
stationary firemen from 5 per cent to 10 per cent were organized. 

1 G. E. Barnett, “Membership in American Trade Unions,” Quarterly Journal 
of Economics, XXX (August, 1916), 846; and “The Present Position of American 
Trade Unionism,” Supplement American Economic Review , XII (March, 1922), 55. 

3 Taken with permission from Leo Wolman, Quarterly Journal of Economics , 
XXX, 499-500. (Harvard University Press, 1916.) 


























AMERICAN TRADE UNIONISM 


563 


4. Of the 1,150,000 persons employed in the leather industries, 
in lumber and furniture industries, straw factories, in electric light 
and power plants, electric supply houses and as electricians and 
electrical engineers from 10 per cent to 15 per cent were organized. 

5. Of the 5,915,000 persons employed in the clothing industries, 
in transportation and in the building trades from 15 per cent to 
20 per cent were organized. 

6. Of the 480,000 persons employed in the manufacture of clay, 
glass and stone products and in cigar and tobacco factories from 20 
per cent to 30 per cent were organized. 

7. Of the 1,084,000 persons employed in mining and in printing 
and book-binding from 30 per cent to 40 per cent were organized. 

8. Of the 73,475 persons employed in liquor and beverage indus¬ 
tries over 40 per cent were organized. 

C ) DISTRIBUTION OF UNION MEMBERSHIP AMONG VARIOUS 

OCCUPATIONAL GROUPS 1 

TABLE LXXXIV 


Group 

1897 

1915 

1920 

Number 

(in 

Thou¬ 

sands) 

Percent¬ 
age of 
Total 
Number 
Organized 

Number 

(in 

Thou¬ 

sands) 

Percent¬ 
age of 
Total 
Number 
Organized 

Number 

(in 

Thou¬ 

sands) 

Percent¬ 
age of 
Total 
Number 
Organized 

1. Mining and quarrying. 

21 

4-7 

332 

12.9 

418 

8-5 

2. Building trades. 

67 

15.2 

533 

20.8 

888 

18.O 

3. Metal, machinery and ship- 







building. 

50 

11 -3 

220 

8.6 

836 

17.O 

4. Paper, printing, and book- 







binding. 

38 

8-5 

ii 5 

4-5 

163 

3-3 

5. Lumber and wood working 

5 

1.2 

21 

0.8 

24 

0-5 

6. Food, liquor and tobacco... 

44 

9.9 

hi 

4-3 

116 

2.4 

7. Restaurant and trade. 

6 

i -4 

89 

3-5 

151 

3 -i 

8. Textile. 

8 

1.8 

23 

0.9 

109 

2 . 2 

9. Clothing. 

15 

3-3 

170 

6.6 

362 

7-4 

10. Leather. 

13 

2.9 

50 

1.9 

9 i 

1.8 

11. Transportation. 

116 

26.2 

576 

22.4 

1217 

24.7 

12. Theaters and music. 

7 

i -5 

87 

3-4 

96 

1.9 

13. Public service. 

11 

2-5 

77 

3-0 

160 

3-2 

14. Chemical, clay, glass and 







stone. 

23 

5-2 

53 

2.1 

52 

1 . 1 

15. Miscellaneous. 

20 

4-4 

hi 

4-3 

241 

4.9 

Total. 

444 

100.0 

2568 

100.0 

4924 

100.0 


1 Adapted with permission from G. E. Barnett, “Growth of Labor Organiza¬ 
tion,” Quarterly Journal of Economics, XXX, 838-46, 793; also “The Present Posi¬ 
tion of Trade Unionism,” Supplement American Economic Review, XII, No. 1 
(March, 1922), 52-55. 









































5<H 


THE WORKER IN MODERN ECONOMIC SOCIETY 


d) THE WORLD-WIDE GROWTH IN TRADE UNIONISM SINCE I9IO 1 

In comparing the combined membership in different countries, 
it is necessary for obvious reasons to omit the years 1915, 1916, 1917, 
1918. For the remaining years, reliable estimates have been obtained 
for 20 countries. 

These countries are: United Kingdom, Germany, U.S.A., France, 
Italy, Belgium, Holland, Denmark, Sweden, Norway, Finland, 
Switzerland, Spain, Austria, Hungary, Czecho-Slovakia, Canada, 
Australia, New Zealand, and Serbia. The total trade union member¬ 
ship in these twenty countries is given in the table below: 


End of Year Membership in 20 Countries 

1910. 10,835,000 

1911 . 12,249,000 

191 2 . I 3 ) 34 I >000 

1913 . 14,728,000 

1914 . 13,222,000 

1919. 32,680,000 


From this table it will be seen that the numbers at the beginning 
of 1920 were treble the number in 1910 and more than double the 
number at the end of 1913, just before the war. A small part of this 
is due to the greater completeness of the returns and another small 
part (probably about 10 per cent) to the natural growth of population, 
but even allowing for these two factors, there has been an enormous 
growth in trade unionism among the workers. This growth is common 
to all countries. 

During the war trade unionism received a check, especially in 
the belligerent countries. The decline was especially great in Germany, 
Austria, Hungary, Italy, and Czecho-Slovakia, but in all these coun¬ 
tries the numbers began to increase in 1917. The end of the year 
1919 saw a phenomenal increase, especially in the Central European 
States. For European countries only, the membership at the end of 
1919 may be put at 26 millions at least, as compared with about 8J 
millions at the end of 1910. 

Of the total membership of 32,680,000 shown above, it is interest¬ 
ing to note that for five of these countries—viz., United Kingdom, 
Germany, U.S.A., France, Italy—the total membership in 1919 
amounted to a little over 27 millions, leaving 5 millions for the remain¬ 
ing 15 countries. 2 

1 Adapted from International Labour Office Bulletin , Series A, No. 17, pp. 1-5, 
February 6, 1921. 

2 [Note: There has been an appreciable decrease in trade union member¬ 
ship since 1920 in most countries.—E d.] 








AMERICAN TRADE UNIONISM 


565 


PROBLEMS 


1. Why do men join unions ? Prepare a list of the causes, listing both the 
economic and non-economic motives. 

2. Why do some men refuse to join unions? Prepare a similar list of the 
probable motives. 

3. What is meant by “functional types of unionism” ? How do functional 
types differ from structural types ? Are different structural forms likely 
to have different functional manifestations ? Illustrate. To what 
extent does function influence structure? 

4. What is “business unionism”? Are the unions in the building trades 
examples of business unionism ? The Amalgamated Clothing Workers ? 
The Railway Brotherhoods? The unions in the printing trades? 
Why or why not ? 

5. What is uplift unionism? Is Hoxie correct in citing the Knights of 
Labor as an example of this type ? What unions do you believe are of 
this type ? Illustrate and explain. 

6. What is revolutionary unionism ? Does this imply a belief in or a prac¬ 
tice of violence ? Are the United Mine Workers a revolutionary 
union ? The Amalgamated Clothing Workers ? The I.W.W. ? The 
United Garment Workers ? Why or why not ? Will a revolutionary 
union sign agreements with the employers ? 

7. What is predatory unionism? Is a union supported by employers a 
predatory union ? 

8 . Can a union be said to fall in only one of these functional types? Can 
it represent at the same time business unionism and predatory unionism; 
business unionism and uplift unionism; uplift unionism and revolu¬ 
tionary unionism; business unionism and revolutionary unionism; 
revolutionary unionism and predatory unionism or other combinations 
of functions ? Can you give illustrations of any such combinations ? 

9. Can a union be composed of men representing all four forms of functional 
unionism ? Can you give illustrations ? 

10. What causes the various unions to differ so widely in their policies ? 
What light does the functional approach to trade unionism throw 
upon such statements as “Unions are monopolies,” “Unions are altru¬ 
istic,” “Unions are selfish,” “Unions believe in violence,” “Unions are 
peaceable” ? 

How do you account for the decline of power of the unions in the late 
i83o’s. What caused their loss of strength in the seventies? Do you 
expect to see similar declines occur in the future ? Why or why not ? 
“The American Labor Movement prior to the Civil War was but 
temporary and did not accomplish anything worth while.” Point out 
specifically in what ways this statement is correct or incorrect. 

14. How do you explain the fact that the trade unions in the United States 
did not in general become permanent until about 1880 ? 


11 


12 


13 


566 THE WORKER IN MODERN ECONOMIC SOCIETY 


15. “The labor history of the country is the story of how in the course of 
three centuries, the wage-earner, as a distinct class, has been gradually, 
even violently, separating himself from the farmer, the merchant and 
the employer and coming to feel that his standing and progress in society 
depend directly on wages and not directly on prices, rents, profits, or 
interest. Explain the significance of this statement. 

16. Why have national unions been formed? Were not local unions com¬ 
petent to deal with local employers ? 

17. “The Knights of St. Crispin would not have been organized had it not 
been for the introduction of semi-automatic shoe machinery.” Is 
this statement correct or incorrect, and why ? 

18. Who were the Knights of Labor? Why were they organized? How 
do you account for their growth and for their decay ? 

19. What was the mixed assembly of the Knights of Labor ? How did they 
differ from the locals that had been formed previously ? Why were 
they organized ? What were the district assemblies, the general 
assembly, and what were their powers ? 

20. What groups organized the American Federation of Labor and why was 
it organized ? 

21. Compare the Knights of Labor and the American Federation of Labor 
as regards (a) structure, (6) aims, ( c ) methods. 

22. What was the significance of the Knights of Labor asking for an exchange 
of working cards with the trade unions? Why did the trade unions 
refuse ? Why did the trade unions request that the trade unions should 
deal with all specific economic and trade questions and that the knights 
should confine their attention to matters of general interest to labor 
as a whole ? Why did the Knights of Labor refuse ? 

23. Could the clash between the Knights of Labor and the trade unions 
have been avoided ? If so, how, and if not, why not ? 

24. “The American Federation of Labor, since it is a federation, is able to 
keep within its ranks unions with divergent policies, a thing which 
would have been impossible under the Knights of Labor.” In what 
ways is this statement true ? Why ? 

25. How do you account for the great increase in union membership around 
1900 and for the failure to gain ground from 1904 to 1910? 

26. What actual powers does the American Federation of Labor have and 
what does it do? 

27. How did the Railway Brotherhoods originate and why have not they 
affiliated with the A.F. of L. ? 

28. Mr. P. M. Arthur, the former head of the Brotherhood of Locomotive 
Engineers, once said, “We are not a labor organization.” What did 
he mean by that? Would it have been true in the i87o’s? by 1900? 
by 1916 ? by 1921 ? Describe the changes in the attitude of the brother¬ 
hoods and account for them. 


AMERICAN TRADE UNIONISM 


567 


29. Why were the Industrial Workers of the World formed? Compare 
them with the A.F. of L. as regards ( a ) membership, ( b ) structure, 

( c ) aims, ( d ) methods? 

30. What is syndicalism ? How does it differ from socialism ? What is 
sabotage? Are the following sabotage: breaking a machine, spoiling 
materials, loafing on the job, carrying out instructions without authority, 
telling by the workmen of unpleasant truths about a product ? What 
is the “general strike” ? How possible is it? 

31. In what ways are the aims of the I.W.W. and the Socialist Party 
similar ? In what do they differ ? How do their methods differ ? 

32. Why do the I.W.W.’s say that they oppose political action ? May their 
real reasons be different from their alleged reasons, and if so what are 
they ? 

33. Who are the Amalgamated Clothing Workers, and how do they differ 
from the majority of the unions that compose the A.F. of L. ? 

34. How do you account for the great increase in trade union membership 
within the last five years? What problems does this increase in 
membership present to the unions themselves ? 

35. It has been frequently remarked that workmen in periods of trade - 
depression turn from purely trade union activity to political action and 
social reform, and that with the revival of business, they swing back to 
economic action. How do you account for this ? 

REFERENCES FOR FURTHER READING 

Barnett, G. E., The Printers 

Beard, Mary, A Short History of the American Labour Movement 

Brissenden, P. F., The I.W.W. 

Buchanan, J. R., The Story of a Labor Agitator 

Budish and Soule, The New Unionism 

Commons, J. R., History of Labour in the United States, 2 vols. 

McNeil, G. E., The Labor Movement 

Montgomery, B. G. de, British and Continental Labour Policy 1900-IQ22 

Perlman, Selig, History of Trade Unionism in the United States 

# 

Robbins, E. C., The Railway Conductors 

Webb, S., and B., History of Trade Unionism, 1920 edition. (The classic 
study of the British labor movement.) 


CHAPTER XIX 

UNION STRUCTURE AND ORGANIZATION 

i. A CLASSIFICATION OF TRADES UNIONS 

BY STRUCTURE 

a) TYPES OE UNION STRUCTURE 1 

1. The craft union .—A craft union in its pure form consists of 
persons following a particular calling or occupation, possessing in 
common a certain skill, and aiming in common at a certain set of condi¬ 
tions of employment. Often, however, the craft union form does not 
appear in such purity as this, and we find associated in a single union 
a number of kindred grades. This is the case, for instance, with the 
boiler-makers, who include angle-iron smiths, platers, caulkers, 

riveters, and various other sections.Thus, an organisation 

which is based on the craft principle may have either a very narrow 
or a very wide basis of membership. It may be confined to a single, 
narrow, specialised occupation, or it may include a large number of 
kindred crafts. In this connection it is important to notice that 
disputes may rise not simply between “craft” and “industrial” organ¬ 
isations, but also between craft organisations on a wider or narrower 
basis. 

A further complication of “craft” unionism occurs where a single 
craft is found in a number of different industries. Thus, there are 
mechanics or millwrights in almost every industry, and much the 
same can be said of enginemen. 

2. Akin to the craft basis of organisation is a basis of organisation 
which it is not easy to define. I will call it for the moment material 
trade unionism. This form of organisation follows the line not of 
the precise craft followed by the worker concerned, but of the material 
on which he may happen to be working, and it is interesting to note 
that this is actually the form of organisation adopted by the largest 
trade union in Germany—the German Metal-Workers’ Union. 

3. Broadly contrasted with craft unionism in all its various 
forms is union by industry, which again may assume a number of 

1 Adapted with permission from G. D. H. Cole, An Introduction to Trade 
Unionism, pp. 13-18. (Trade Union Series, No. 4. Published by the Labour 
Research Department, 25 Tothill St., Westminster; and by George Allen and 
Unwin, Ltd., 20 Museum St., London, W.C.) 

568 


UNION STRUCTURE AND ORGANIZATION 


569 


different forms. Advocates of union by industry, broadly speaking, 
set out to combine in a single union all those workers who co-operate 
in producing a common product or type of product, or in rendering 
a common service, irrespective of the degree of skill which they happen 
to possess. Thus they aim at creating one union for the railway 
industry, one union for the mining industry, one union for the building 
industry, and so on. This form of organisation, however, passes 
over easily into a form of organisation which aims at copying exactly 
the present capitalist structure of industry and at grouping in a 
single union all those persons who work under a common employer 

or group of employers.Thus, when a union sets out to combine 

in its membership the whole personnel of the railway industry, it 
easily passes over into the endeavour to combine in membership all 
those persons who are employed by railway companies, whether they 
are engaged in rendering the service of railway transport, or are 
producing some quite different kind of product, e.g., locomotives or 
railway trucks, or are rendering some different kind of service, e.g., 
serving on ships or in hotels. In this case organisation by industry 
does not coincide with organisation following the lines of the employer 
by whom the workers are employed; but the two forms of organisation 
do approximate sufficiently to enable them to be very easily confused. 
Thus, union by industry, which groups together all the workers who 
co-operate in rendering a common service, is very easily confused in 
certain cases with what we will call “employment” unionism, which 
aims at following the lines of the employers’ organisation. 

4. A further type of union is that which follows the line of sex. 

5. There is one further type of union which it is only necessary 
to mention in order to dismiss it with a word. This is the type which 
endeavours to include in a single organisation all workers irrespective 
of trade, craft, industry, sex, or any other consideration, on the basis 
merely of their own status within the capitalist system. Of this type 
is the organisation known as the Industrial Workers of the World. 

b) SOME FEDERATIONS OF UNIONS 1 

There appears what may be termed the crafts or trades union. 
This organisation is a federation cf unions in different crafts or 
industries. It has developed three principal forms or units: the 

1 Adapted with permission from R. F. Hoxie, “Trade Unionism in the United 
States, General Character and Types,” Journal of Political Economy , XXII 
(March, 1914)? 207-11. 



570 


THE WORKER IN MODERN ECONOMIC SOCIETY 


local trades union, or city federation; the state federation; and the 
national or international federation, which unite through delegate 
organizations, respectively, the unions of a locality, a state, or a 
larger territorial area. Examples are the Chicago Federation of Labor, 
the Illinois Federation of Labor, and the American Federation of 
Labor. The essential characteristic of the trades union is that the 
constituent organizations retain their individual independence or 
sovereignty. 

The second variety may in the absence of any generally accepted 
designation be termed the quasi-industrial federation. It is generally 
a federation of industrially related craft unions, appearing in local, 
district or state, and national units. Examples of it are to be seen 
in local printing trades and local building trades councils, in state 
building trades councils and system federations of railway employees, 
and in the Building Trades, Metal Trades, and Railroad Employees 
departments of the American Federation of Labor This variety of 
unionism is one in which the constituent craft or amalgamated craft 
unions retain their individual sovereignty, yet appear and act as a 
single organization with respect to designated affairs of common 
interest. It resembles both the trades union and the industrial 
union types, but differs from each essentially. It is a narrower and 
closer association than the trades union and is vitally unlike it in the 
scope and character of its activities. On the other hand, it lacks 
the organic homogeneity and centralization of the industrial union. 
As it is in every case, roughly speaking, an organization within a 
particular industry and as its aims and activities approximate—so far 
as they go—those of the industrial union type, it may perhaps be 
regarded also as an intermediate phase—a mode of transition between 
the craft and industrial union. 

2. CRAFT VERSUS INDUSTRIAL UNIONISM 

a) CRAFT AND INDUSTRIAL UNIONS 1 

When a wage earner discovers that, as an individual, he is at a 
disadvantage in selling his labor, and that this disadvantage is the 
outcome of his own competition with fellow workers for the same jobs, 
the discovery places him in possession of the remedy, which is combina¬ 
tion. The sort of combination which logically follows his discovery 
is not combination with all wage earners, but with those who are 

4 

1 Adapted with permission from Helen Marot, American Labor Unions , pp. 
78-111. (Henry Holt & Co.) 



UNION STRUCTURE AND ORGANIZATION 


571 


after the same jobs. Such combinations are the trade unions, and 
such unions are simple business propositions, especially for those 
workers who pursue trades or crafts which require some degree of 
experience and training. 

The trade form of organization not only follows the impulse for 
combination under stress of competition, but it follows individual 
preferences in the association of men of similar equipment and social 
standing. All other things being equal, machinists as a group would 
be more harmonious than a mixed group of machinists and shoe 
operators; or carpenters would appreciate association with other 
carpenters more than association with the various sorts of employees 
in a department store. The trade union is in this sense an instinctive 
form of organization, and, as it follows individual preferences, it is 
the primitive form of the existing labor combinations. Herein lies 
the strength and the weakness of “pure and simple” trade unionism. 

The industrial union is based on the labor groupings which 
capital creates for the manufacture and distribution of a commodity 
or of commodities of a similar character in competition or use. The 
industrial unionists not only disregard the personal preferences for 
association, but they set themselves the task of overcoming those 
preferences and creating in their place new desires for association 
based on class interests which develop in the struggle for control of 
industry; for industrial freedom. 

While the trade unionist conceives of a job as a thing in itself, 
the industrial unionist realizes that it is a part of a process. In other 
words, the unit of organization for labor, as it is for capital, is the 
industry in which workers, representing possibly several trades, are 
associated for the manufacture of a product. 

The trade unionist denies that industrial organization will success¬ 
fully co-ordinate all groups of workers. He claims that trade auton¬ 
omy with federation of trade unions is meeting the modem conditions 
imposed on labor. 

The Railroad Brotherhoods and the controlling faction of the 
American Federation of Labor represent these claims. The latter 
organization can point to the trials which it has made in the past in 
industrial organization, which were relinquished for the pure trade 
form, as in the case of the printing trade. In 1873 the pressmen 
separated from the compositors and formed a craft union, on the 
ground that their interests were overlooked and outvoted. Twelve 
years later the stereotypers also withdrew and formed their own 


572 THE WORKER IN MODERN ECONOMIC SOCIETY 

independent union. The year following the bookbinders set up for 
themselves. They all are today allied through printing trades 
councils, but their bargaining is conducted independently, and their 
alliance precludes sympathetic strike action. 

It is important to understand the changes and transitions which 
are taking place within the American Federation which, it is claimed, 
meet the objections of industrial unionists to the general trade union 
policy. The officers of the Federation repeatedly assert that there 
is nothing in the construction of the American Federation which 
prevents each international union from adopting industrial organiza¬ 
tion within its own province, or amalgamated with other international 
unions, so long as it does not challenge the jurisdiction of another 
international. This is the crux of the dispute between the industrial 
and trade union advocates within the membership of the Federation. 
The administration cherishes the trade form and tolerates the indus¬ 
trial form only when those most concerned resolutely stand for it. 
The effort of industrial unionist members is to reverse this position, 
or even to force the trade unionists to relinquish their position, how¬ 
ever much they may be concerned to hold it. In 1901 the American 
Federation of Labor issued what it calls its “Autonomy Declaration,” 
as follows: 

The American Federation of Labor is conceded by all students of 
economic thought to be the result of organization on trade lines, and we 
declare that as a general proposition the interests of the workers will be 
best conserved by adhering as closely to that doctrine as the recent great 
changes in methods of production and employment make practicable. We 
hold that the interests of the trade union movement will be promoted by 
closely allied and subdivided crafts giving consideration to amalgamation, 
and to the organization of District and National Trade Councils to which 
should be referred questions in dispute, and which should be adjusted within 
allied crafts’ lines. 

Eleven years later [in 1912] this declaration was reaffirmed, and 
stands today as the official word on the subject of trade and industrial 
organization. It is evident that the district and national councils 
or departments referred to were intended as clearing houses for 
jurisdictional disputes between the national unions. However, 
these trade departments which have been created are commonly 
regarded by the membership as the substitute for proposed schemes 
of industrial organization. The functioning of these departments is 
for that reason important. 


UNION STRUCTURE AND ORGANIZATION 


573 


The four trade departments are the building, metal, mining, and 
railroad. Before the proposition was made to create a National 
Building Trades Department, local building trades councils had 
had years of experience in dealing with disputes of related unions. 
The building industry in all large centers has furnished fertile soil 
for disputes between craftsmen over their respective rights to a job. 
The introduction of new methods of construction, new tools, new 
materials is the normal condition of the industry. The changes 
which architects introduce in their specification for practically every 
operation of importance cut across the trade lines marked out by trade 
union organization, and even create new trades over which no one 
local more than another can claim jurisdiction. 

In disputes over the disposition of a job the members of a union 
look to their officers to see that their claims are won. Carpenters 
who have been in the habit of hanging doors expect their officers to 
see to it that the job is not given to metal workers because the doors 
required in the specifications happen to be metal. But the metal 
workers claim that all work done in metal belongs to them and that 
carpenters are workers in wood. Such disputes may seem trivial, 
but it is a matter of bread and butter to the carpenters and the metal 
workers concerned. It is a matter of importance to the unions, 
marked out as they are on trade lines. Whichever union fails to win 
out finds that its standing is so much the weaker with its members. 
The industrial union not recognizing trade divisions, but regarding 
each operation as a whole, would leave the burden of dividing up the 
work to the architects or contractors and avoid internal union dissen¬ 
sion. 

The proposition of industrial unionists to include all the workers 
in an industry under one contract would not apply to the building 
industry, where capital is disorganized and represented by trade divi¬ 
sions. There are in the industry contractors for electrical work, for 
masonry, for plumbing, for painting and so on. Each contractor 
employs tradesmen, and it is with these trade contractors that union¬ 
ists must deal separately, however much they might prefer to make 
one industrial contract covering all artizans. 

The official movement for industrial organization is the movement 
led by the three unions of the Federation which are recognized as 
industrial: the United Mine Workers (coal miners), the Western 
Federation of Miners (metal miners), and the Brewery Workers’ 
Union. 


574 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Attention was called to the fact that the Federation has given 
jurisdictional rights to several international unions over a whole 
industry; that so far as the Federation is concerned these international 
unions may organize on industrial lines or may break up into trade 
divisions, provided they do not encroach on the territory of another 
international union chartered by the Federation. Jurisdictional lines are 
carefully guarded for such important craftsmen as engineers, 
electricians, carpenters, plumbers. 

On the other hand the United Mine Workers were granted jurisdic¬ 
tion over all workers of whatever crafts who were employed in or 
around the mines. The explanation for this departure is that the 
mines are isolated; that the men mining the coal are the dominating 
labor element; that the miners could do more for the organization 
of the scattered workers of other crafts than their own craft union 
could accomplish. 

The Brewery Workers, in the early period of its affiliation with the 
American Federation, outlined for itself an industrial form of organiza¬ 
tion. As it was one of the first unions chartered by the Federation, 
there were in the early years no claims of other unions for jurisdiction 
over any artizans working in and around the breweries. As early 
as 1887 the secretary said: 

The employers realized that this placed the union in a position 
of advantage. When the American Federation granted charters to 
craft unions which included the crafts working around the breweries 
the brewery owners did their part to encourage the dispute over 
jurisdictional rights. These fights have been carried back and forth 
through the conventions of the Brewery Workers, through the unions 
of the other crafts involved, and through the conventions and executive 
councils of the Federation. The latter in 1900 endorsed the general 
principle of industrial organization for the brewers. It later, under 
pressure of the other national craft unions, decided that the brewers 
were not entitled to their industrial claims. The Brewery Workers 
refused to recognize this decision and were expelled. But many 
firemen, engineers, and other artizans refused to join their craft 
unions and insisted on their membership in the Brewery Workers. 
Many local city organizations of the American Federation sided with 
the brewers and the charter was at last returned. 

The whole story of the Brewery Workers in relation to industrial 
unionism is of peculiar importance. It throws light on the relation 


UNION STRUCTURE AND ORGANIZATION 


575 


between the form of a labor union and the development of an industry 
which has evolved from home manufacture to a high state of capitali¬ 
zation and concentration and at last to the inclusion of related pro¬ 
ducts. The story is important, as the Brewery Workers have met a 
greater and more persistent opposition from the craft unions than 
have the miners. A reason for this is that their industry is located 
in urban centers where craft unions are in active operation. 

It is not the effort to extend the territory or to centralize the 
bargaining which distinguishes the Miners’ Unions and the Brewery 
Workers as industrial; the industrial feature is the inclusion of every 
worker employed in the industry in the making of the agreements 
with the employers. In the same way the district councils are 
industrial when their agreements or their disagreements include each 
and every worker employed in the industry. These organizations 
are examples of what may be called the pure and simple industrial 
union, including as they do all the workers employed in a single 
industry. The purpose of the pure and simple industrial union of 
the American Federation is the same as the purpose of the pure and 
simple trade unions; the making of agreements with capital for 
conditions of employment. These unions regard the treaties with 
capital and each economic gain for the workers as important ends in 
themselves. Their effort is to make treaties and avoid war whenever 
a labor gain can be secured through peaceful bargaining or when a 
treaty brings some token of gain to the industrial group. 

The intention of industrial unionism may be either to secure 
inter-union action between groups of related workers of an industry 
for the purpose of strengthening the power of the group in the making 
of agreements with capital, or to unite the related groups of an industry 
for the purpose of developing class action, and to depend solely on 
this development to force concessions from capital without entering 
into contract with it. 

Where capital is organized throughout an industry, as in mining 
and railroading, the organization of the workers along industrial lines 
offers obviously the best opportunity for collective bargaining. But 
in such industries as building, where capital is divided by trades, 
there is no such obvious advantage in the industrial organization of 
the workers, as their bargaining must follow trade lines. 

Where, however, the object of industrial organization is class 
action without intention or desire to contract with capital, it is not 


576 


THE WORKER IN MODERN ECONOMIC SOCIETY 


important whether capital is organized on trade or industrial lines. 
The important consideration is the elimination of lines which divide 
labor interests. 

The allegiance of the more highly skilled artizans to the trade 
form of organization is weakened as their position as craftsmen is 
weakened, that is, as machinery and management reduce the craft 
to a lower level of skill and artizanship. A craftsman quite naturally 
resists changes which accelerate the leveling of his trade to semi¬ 
skilled or common labor. 

See also chapter v, Selection 5, Skill and the Machine; and chapter 
vii, Selection 8, Immigration and the Labor Market. 

b) SOME ARGUMENTS FOR INDUSTRIAL UNIONISM 1 

There are two main arguments, either in itself sufficient, in 
favour of industrial unionism. But both these arguments hold good 
only on an initial assumption. 

The first argument is that industrial unionism provides the stronger 
force to use against the capitalist. Advocates of industrial unionism 
always point out that against the mass formation of capitalism a 
mass formation of labour is needed, that craft unionism has not the 
strength to combat the vast aggregations of capital, that it leads 
essentially to dissension in the workers’ ranks, that it enables the 
employer to play off one set of workers against another, and so to 
strengthen the capitalist organization of industry. These arguments 
are overwhelming in force, if, but only if, trade unionism is regarded 
as a class movement based upon the class struggle. If it is not, 
may not the skilled worker be right to fear alliance with the man 
farther down, and may he not see more hope for himself in holding the 
unskilled worker under, and thereby preserving his own monopoly 
of labour ? 

Jack London in The Iron Heel and H. G. Wells in The Sleeper 
Awakes have both envisaged a state of society in which capitalism has 
triumphed for the time by buying over the skilled workers to its side, 
and with their help exploiting the unskilled the more securely and 
completely. Far be it from me to say this, or anything like it, is in 
the mind of the craft unionist today; but it is, I feel, the logical 
outcome of craft unionism. If the skilled workman so much needs 
protection from the man beneath him that they cannot organize 

1 Adapted with permission from G. D. H. Cole, Self Government in Industry , 
pp. 130-32. (G. Bell & Sons, Ltd., 1918.) 


UNION STRUCTURE AND ORGANIZATION 


577 


together against capitalism, is it so long a step for him to ally himself 
with capitalism, and to sell his class for security and better con¬ 
ditions under capitalism? 

The second argument is no less fundamental, and it again rests 
on an assumption. If the purpose of trade unionism is merely protec¬ 
tive, if it exists only to maintain or improve conditions of employment 
within the wage-system, then there is no case for one form of organiza¬ 
tion rather than another. We can decide as expediency may suggest. 
But if the purpose of trade unionism is a bigger and finer thing than 
the mere protection of the material interests of its members; if, in fact, 
trade unionists have set before themselves the positive aim of winning, 
through their unions, self-government in industry, there can be no 
doubt about the right structure. Clearly, craft unions, based on 
process and not on product, cannot make any effective claim to control 
industry. Only an industrial union, embracing the whole personnel 
of an industry, can assume control over that industry. 

C ) AMALGAMATION PROPOSAL FOR THE RAILWAY UNIONS: 

THE RADICAL VIEW 1 

i. The Force-to-Meet-Force Argument 

The supreme need of railroad men at the present time is a consolida¬ 
tion of our many labor organizations into one compact body. The 
power of the companies has become so enormous, their solidarity so 
intense, and their greed so voracious, that the prevailing type of 
federated craft unionism is no longer able to cope with the 
situation. 

As I write this [March, 1921] the companies are making a great 
drive to crush the unions and to force us down to serfdom. Some 
time ago they secured the passage of the infamous Esch-Cummins 
Law limiting the right of railroad men to strike; and now they are 
before the Railroad Labor Board demanding the abolition of the 
national agreements, reductions in wages, lengthening of the workday, 
reinstatement of piecework and a general return to pre-war slavery. 
Considering their high-handed methods it will be strange indeed if the 
situation does not wind up in a terrific strike. For this threatening 
struggle railroad men should be prepared with the strongest, closest- 
knit organization possible. The only protection the workers have had 
from the most savage exploitation is our trade unions. These organ- 

1 Adapted with permission from W illiam Z. Foster, The Railroaders’ Next Step, 
pp. 1-2, 39-43. (Trade Union Educational League, Chicago.) 


578 THE WORKER IN MODERN ECONOMIC SOCIETY 


izations have achieved results entirely upon the basis of the amount of 
power they have been able to exert. The railroad owners can appre¬ 
ciate no other argument than that of might. 

ii. The Matter of Non-Railroad Affiliations 

In working out an amalgamation project for the railroad industry, 
consideration must be given to the very important fact that the unions 
therein divide into two distinct classes: (i) those whose membership 
is confined entirely, or practically so, to the railroads; (2) those that 
have large bodies of members in other industries. Of the first class, 
or purely railroad unions, are the Engineers, Firemen, Conductors, 
Trainmen, Switchmen, Carmen, Telegraphers, Clerks, Signalmen and 
Maintenance of Way Workers, ten in all. Of the second class, or 
semi-railroad unions, are the Machinists, Blacksmiths, Boilermakers, 
Electrical Workers, Sheet Metal Workers and Stationary Firemen— 
six in all. 

Now a special problem arises from the fact that amalgamation 
would affect these two classes of unions very differently. In the case 
of the purely railroad organizations the matter is comparatively 
simple. Their whole membership would be involved and they would 
simply merge completely with the industrial union. But with the 
semi-railroad organizations the matter is much more complex. Only 
that portion of their membership working upon the railroads would be 
affected, and an unmodified amalgamation project would oblige them 
to surrender these large sections of members to the industrial union. 

But it might just as well be recognized at the outset that the six 
semi-railroad unions would never agree to that—at least not within 
measurable time. In trade union practice all over the world it is 
found that while it is feasible, although difficult, to get unions to merge 
together completely, it is next to impossible to induce one organization 
to surrender any considerable part of its members to another. This 
would especially be the case with our six semi-railroad unions. Deeply 
imbued as they are with craft union principles, and accustomed to 
fight bitterly over the control of a man or two, they could be depended 
upon to fight to the last ditch against giving up such large portions 
of their membership to the industrial union. They would wreck any 
amalgamation proposition based on such a program. 

However, there is a way out of the difficulty. It lies in a modified 
amalgamation. As the basis of their refusal to give up their members, 
the six semi-railroad unions would argue with great weight that the 
mechanics have not only an industrial interest as railroad workers, 


UNION STRUCTURE AND ORGANIZATION 


579 


but also a craft interest as tradesmen. They would contend that the 
machinist or boiler maker who is now working on the railroad may 
be working next week at his trade in some other industry; and that, 
consequently, he has a direct interest in maintaining good conditions 
for his craft in all industries, and a moral obligation to belong to the 
organization that is doing that work. Whether right or wrong, this 
contention would have to be met, and it could only be met success¬ 
fully by giving the men involved a double affiliation to correspond to 
their double interest. That is to say, the shop mechanics would at 
once be affiliated to the railroad industrial union and also to their 
respective craft unions. The two unions would divide between them 
the control over these classes of workers, each organization reserving 
the functions necessary to its proper working. Likewise, they could 
apportion the dues and per capita according to the services rendered 
by each organization. 

d) ECONOMIES EFFECTED BY INDUSTRIAL FORM OF ORGANIZATION 1 

Further advantages of organization would result from large 
financial economies. As things now stand, the waste in handling 
the business of railroad workers is enormous. Duplication of effort 
occurs to an unbelievable extent. The sixteen groups of officials 
run over the country without regard to each other. Often local 
unions of one organization are allowed to fall to pieces for want of 
attention while at the same time a half dozen paid organizers of the 
other trades are in the locality and not overburdened with work. 

Each of the sixteen organizations holds its own convention at enor¬ 
mous expense. With often as high as two or three thousand local union 
delegates in attendance (most of whom look upon such affairs as mere 
vacation trips) the cost runs from $100,000 to $500,000 apiece. The 
natural result of such absurdities is that conventions are becoming 
fewer and fewer. But with a general industrial union, there would 
be only a few hundred delegates in attendance, and they would 
be there for business. 

e) THE AMALGAMATION OF RELATED TRADES 2 

While the radical industrial unionists, who favor combining all 
crafts, skilled and unskilled, in an industry, have been engaged in 
controversy with the conservative trade autonomists who oppose this 

1 Adapted with permission from William Z. Foster, The Railroaders’ Next Step, 
pp. 43-44. (Trade Union Educational League, Chicago.) 

2 Adapted with permission from Theodore W. Glocker, “Amalgamation of 
Related Trades in American Unions,” American Economic Review , V (1915), 554 _ 75 - 


580 the worker in modern economic society 


policy, a gradual evolution has been taking place in consequence of 
which craft unions are disappearing. Of 133 national unions, most 
of them affiliated with the American Federation of Labor, only 
twenty-eight may be called craft unions, if by a craft we mean work 
requiring identical skill and training. Nor do these figures tell the 
whole story, since about one-half of the twenty-eight craft unions are 
co-operating through loose alliances with other related trades in the 
same industry. Yet the disappearance of the craft union does not 
necessarily prove the ultimate victory of the industrial union. Only 
five of the national unions claim jurisdiction over all trades in an 
industry. The remaining 100 are of an intermediate type. They 
unite only part of the trades in an industry. We shall call them 
amalgamations of related trades. 

The number of such amalgamations has increased greatly since 
1894. Between 1894 and 1904 the various unions of boot and 
shoe workers coalesced, as did also those of the hatters and of the 
textile workers; the union of furniture workers combined with that 
of the machine woodworkers; the Iron Molders’ Union absorbed the 
coremakers; and the union of coal-hoisting engineers was merged 
into the United Mine Workers. The period witnessed the rise of 
the Amalgamated Meat Cutters and Butcher Workmen with its 
minutely subdivided groups of workers, skilled and unskilled, in the 
meat-packing houses. During this decade, also, the United Brewery 
Workmen, the United Mine Workers, and the Western Federation of 
Miners embarked on their policy of industrial unionism and attempted 
to bring into their organizations all kinds of workers in the industry. 

During the ten years since 1904 the movement toward amalgama¬ 
tion of related trades has been accelerated by the rise of the Industrial 
Workers of the World. The growth of these has undoubtedly 
stimulated the American Federation of Labor to pursue a more liberal 
attitude toward trade amalgamation. The dominant faction in 
the American Federation of Labor favors the amalgamation of closely 
related trades, but are inclined to broaden very slowly their inter¬ 
pretation of the words “closely related.” They have been especially 
reluctant to encourage the absorption of unskilled workers by an 
organization of the skilled. 

Should the amalgamation of related trades include all or only a 
part of the crafts in an industry ? Should the government by which 
such related trades are united be a centralized amalgamation, or 
should it be a loose alliance or federation ? To answer these questions 


UNION STRUCTURE AND ORGANIZATION 581 

we must consider the kinds of related trades which have tended to 
unite. 

An important reason for uniting a group of related crafts has 
been the need of co-operating to maintain strikes against a common 
employer. Without co-operation between the related crafts in an 
industry, the members of other trades, in order to keep the plant in 
operation and thus remain employed, frequently do the work of the 
strikers or instruct nonunionists how to do it. Thus, in times past, 
locomotive firemen have run engines during strikes of locomotive 
engineers. Undoubtedly, unions would be able to bargain much 
more effectively for better working conditions if the agreements 
or contracts of all trades in an establishment expired at the same time, 
if the demands of the several trades were presented jointly to an 
employer, and if a refusal to comply with these demands caused every 
employee in the establishment to quit work. 

On the other hand, strikes of a single trade are unfair to the other 
related trades since they can often shut down a large plant and throw 
out of employment hundreds of workmen who have no voice in the 
matter. One reason why the International Typographical Union 
wishes to retain control over the machinists in the printing office is 
because a strike on their part may abruptly halt all activities and 
throw the other workers out of employment. 

Another reason for amalgamation and federation of related trades 
is the movement of workers from one craft or division of a craft to 
another. The ranks of the locomotive engineers are replenished 
from the locomotive firemen. A railroad brakeman may become 
later a railroad conductor. Many carpenters and cabinetmakers 
enter the craft of patternmaking. Under such conditions the vari¬ 
ous groups of workers must combine to control the supply of the 
labor in the industry and to prevent disastrous competition for 
employment between members of different unions. The combination 
of related trades solves also the difficulty created by the refusal of 
journeymen who change their trade to sever their connection with 
the union of their former craft in order not to lose the right to its sick, 
death, and other benefits. 

Another advantage of amalgamation and federation of related 
trades is that it reduces the number of jurisdictional disputes concern¬ 
ing the right to do certain work. 

An objection to trade amalgamations is that while related crafts 
have many interests in common, they have other interests which may 


582 


THE WORKER IN MODERN ECONOMIC SOCIETY 


directly conflict. This difficulty is .increased when one trade out¬ 
numbers all the others added together, since the group having the 
•majority is apt to use the amalgamation to further its own concerns 
at the expense of the others. Thus, in the United Association of 
Journeymen Plumbers, Gas Fitters, Steam Fitters, and Steam Fitters’ 
Helpers, the gas-fitters and steam-fitters complain that they are out¬ 
voted by the plumbers. They declare that most of the funds are 
expended in behalf of the plumbers, and that most of the legislation 
adopted is favorable to that trade. 

This weakness of the trade amalgamation has arisen largely from 
the failure to provide in its form of government for the fact that 
it is a federation of distinct groups. When identity of interest is 
slight and divergence or conflict of interest is great, some loose form 
of federation or alliance of semi-independent craft units may be desir¬ 
able. Amalgamations and federations of related trades may be 
divide broadly into (a) those combining trades working for the same 
employers and (jb) those combining trades working usually for differ¬ 
ent employers. 

Trades producing materials and tools have few interests in common 
with those using them. Co-operation by means of sympathetic strikes 
is the only way by which such widely separated trades may help 
one another, and the expediency of even this form of co-operation 
seems doubtful. In the first place, strikes in behalf of such remotely 
related trades are held in much disfavor by the public. Moreover, 
the employers consider that they have been treated very unfairly 
when their employees, to whom they have granted favorable terms, 
strike in behalf of a trade with which neither party has any personal 
relations. Combination between such remotely related trades seems 
undesirable. If they do attempt to combine, federation or merely 
a written agreement would be preferable. 

1. The first essential, then, for a successful combination of related 
trades is, that such trades have the same employers. If, in addition, 
such a combination admits neither auxiliary trades nor unskilled 
workers, its desirability will not be questioned by trade union leaders. 
In fact, the only debatable question is whether such an organization 
should be a federation or an amalgamation. 

2. The second question to be considered is whether the skilled 
and unskilled workers in an industry should be combined in the same 
organization. Undoubtedly the unskilled gain greatly from such an 
alliance. Organizations composed wholly of unskilled workers, such 


UNION STRUCTURE AND ORGANIZATION 583 

as the International Brotherhood of Foundry Employees, the Inter¬ 
national Association of Glass House Employees, the International 
Hod Carriers’ and Building Laborers’ Union, and the International 
Association of Blast Furnace Workers and Smelters, are practically 
impotent to improve the conditions of their members. Since their 
work requires little or no training, strikes are useless. 

The constant tide of immigration into the United States makes 
any effective regulation of the supply of general laborers impracticable. 
Moreover, unskilled workers can be kept faithful to the union only 
with great difficulty. During unemployment, which is very frequent 
among them, they are expelled for failure to pay dues, for acting as 
strike breakers, or for selling their labor at less than the union scale 
of wages. 

The chief hope of the unskilled workers rests in an alliance with 
the skilled, but the skilled gain nothing by such an alliance. On the 
contrary, such amalgamation entails a sacrifice, since it imposes on 
the skilled the obligation of fighting battles in behalf of the unskilled. 
The keynote of the dominant unionism has been self-interest. The 
consistent pursuance of this policy by the American Federation of 
Labor and its constituent international unions has made them succeed 
where the Knights of Labor, with its altruistic ideals of brotherhood, 
failed. Following this policy, the skilled trades have refused to unite 
with the unskilled. 

There are aristocracies even among the aristocrats. Certain 
trades, whose members possess a higher degree of efficiency and 
training than do their fellow employees, have refrained from entangling 
alliances. The exclusiveness of the locomotive engineers has undoubt¬ 
edly helped to prevent the successful federation of all railway 
employees. The bricklayers have held aloof from local and national 
federations of the building trades. The marine engineers have 
refused to affiliate with the International Seamen’s Union. Years 
ago the window-glass blowers were reluctant to amalgamate with the 
less skilled window-glass cutters. Today the situation is reversed. 
The introduction of machinery has greatly reduced the skill of the 
blowers, and the cutters, who now possess the greater skill, have 
seceded from the amalgamation of window-glass workers to form an 
independent organization. 

Nevertheless, as division of labor becomes more minute, as the 
old method of apprenticeship fails, and as the groups of skilled and 
semi-skilled are being recruited in an increasing number of instances 


584 THE WORKER IN MODERN ECONOMIC SOCIETY 


by the promotion of the common laborers required for the many odd jobs 
existing in every industrial establishment, the other trades are mani¬ 
festing a growing tendency to admit such potentially dangerous 
competitors to their unions. 

/) THE CREATION AND FUNCTIONING OF LOCAL TRADE COUNCILS 1 

The community of interests in the building trades prompted the 
formation of building trades sections or building trades councils in vari¬ 
ous cities. In some places these councils worked in harmony with the 
local federation as part of the central labor union. In other places, 
either the city federation made no provision for allied trades sections, 
or the trades councils preferred to remain independent. Where the 
central labor union and the trades council were entirely discon¬ 
nected, disputes frequently arose over the respective jurisdictional 
claims of the two bodies. 

The national federation of these local councils was the result of 
a corresponding development in the building industry itself, viz., 
the rise of large contractors who extended their activities to many 
important cities. Many workmen in the building industry no longer 
depended exclusively on their home city for a livelihood, but found 
it necessary to travel from place to place. To meet these new condi¬ 
tions a national affiliation of trade councils was proposed and finally 
effected, with only loose powers, however. 

3. THE WORKSHOP' AS THE LOCAL 2 

Active trade unionists have long lamented the lack of interest 
among their fellows in trade union branch meetings. The branch 
meetings are usually, except on the occasion of some general forward 
movement, ill-attended, and serve in the .main only as places at 
which contributions can be paid. The members of the branch have 
in common one with another their membership of the same trade or 
industry; but, apart from general trade questions, they have few 
common preoccupations or problems. They work, as a rule, for 
various employers, and the employees of a single firm are scattered 
in a large number of distinct unions and branches. 

1 Adapted with permission from William Kirk, National Labor Federations in 
the United States, pp. 80-83. (Johns Hopkins University Studies in Historical and 
Political Science. 24th Series, September, 1906.) 

2 Adapted with permission from G. D. H. Cole, Self-Government in Industry , 

pp. 138-41. (G. Bell & Sons, Ltd., 1920.) 


UNION STRUCTURE AND ORGANIZATION 


585 

The true basis of trade unionism is in the workshop, and failure 
to realise this is responsible for much of the weakness of trade unionism 
today. The workshop affords a natural unit which is a direct stimulus 
to self-assertion and control by the rank and file. Organization that 
is based upon the workshop runs the best chance of being democratic, 
and of conforming to the principle that authority should rest, to the 
greatest possible extent, in the hands of the governed. 

Instead of the “residence” branch, let us have the “works” 
branch. Let large works be split, where necessary, into more than 
one branch, and small works be combined into a single branch; but 
let the general principle of organization be that of the “works” 
branch. Then the shop stewards 1 will become the branch officials, 
and the shop stewards’ committee the branch committee. The district 
committee, consisting as now of delegates from branches, will then 
consist, as the unofficial committees do today, of the leading shop 
stewards drawn from the shop branches. The unofficial workshop 
movement will have been taken up into, and made a part of, the 
official machinery of trade unionism. 

Should we be better off if this came to pass ? I think we should, 
for two reasons. In the first place, the rank and file would be far 
better equipped for taking into their own hands the direction of policy, 
and for controlling and guiding their leaders; and, in the second 
place, the trade union movement would have received a new orienta¬ 
tion in the direction of control. 

It is certain that, where workshop organization is strongest, the 
trade union demand for the control of industry is also strongest. 
The natural striking point for trade unionism is the workshop, and 
it is in the workshop that the most advanced demands will be formu¬ 
lated, and by workshop action that the greatest concessions will be 
secured. If we want trade unionism to develop a positive and 
constructive policy, it is in and through the workshop that we must 
organise; for there alone will constructive demands be made. 

The present organization of trade unionism was suited to the 
movement in its negative and critical stage. But as soon as trade 
unionists set before themselves the object of supplanting the employer 
in the control of industry, they must take the works as their basis 
of organization, and strain every nerve to win in the workshop and 
the works a direct control of production. 

1 1 .e., local plant representatives of the different trades unions. 


586 THE WORKER IN MODERN ECONOMIC SOCIETY 


4. THE INTERNATIONALS’ CONTROL OF 

THE LOCALS 1 

The present dominance of the national union in American labor 
is based upon the steadily increasing control exercised by the national 
unions over the local unions. This development presents two aspects: 

(1) the increasing control over the locals already in the organization, 

(2) the pressure upon unaffiliated locals to join the internationals 
which have jurisdiction over their crafts. 

The increase in the degree of control over the affiliated locals has 
been due to a variety of causes, chief among which are the establish¬ 
ment of nationally administered beneficiary features, the financing 
of strikes by the national unions, and the negotiation of national 
agreements with employers. These extensions of activity on the part 
of the national union have necessitated an increasingly stricter 
control by the national union over its affiliated local unions, which has 
exhibited itself in many ways, such as the national regulation of 
admission requirements, the national control of strikes, and the 
adoption of national working rules. 

The national unions have exerted pressure on the unaffiliated 
unions by discriminating against their members who seek work in 
other cities, and wherever practicable by establishing rival local 
unions. The national unions, moreover, have used their increasing 
control of city federations and the local trades-councils to force the 
independent unions to affiliate. The result has been that American 
local trade unions are connected with some national union probably 
more generally than the local unions in any other country. 

5. CITY FEDERATIONS OF LABOR 

a) THEIR FIELD OF ACTION AS VIEWED BY A FRIENDLY 

CRITIC IN 1899 2 

Organization .—The organization of municipal federations of labor 
is a strong sign, not only of the power of organized labor, but also of the 
growing wisdom of labor leaders. The city is the natural, proper, and 
convenient sphere of action of organized labor. The greatest number 

1 Adapted with permission from G. E. Barnett, “The Dominance of the 
National Union in American Labor Organization,” Quarterly Journal of Economics, 

XXVII (1913), 457-58. 

2 Taken with permission from William M. burke, History and Functions of 
Central Labor Unions, pp. 42, 43. (Columbia University Studies, 1899.) 


UNION STRUCTURE AND ORGANIZATION 587 

of laborers is already found in cities, large and small, and the tendency 
is toward a still greater concentration of these centers. There are 
practically no labor unions outside of the cities, as the natural result 
of the paucity of skilled laborers of any one craft in the villages, towns 
or country. 

The sympathetic strike and the boycott are the two most powerful 
weapons for offense or defense possessed by labor unions, and neither 
of these can be used to advantage where some central organization 
does not exist. The most successful central labor bodies, as will be seen 
later, are those which most frequently use these weapons. 

b) SOME SHORTCOMINGS OF CITY LABOR FEDERATIONS AS 

VIEWED IN 1899 1 

At best, central labor unions are only loose federations with no 
really binding laws to hold them together. The sole penalty attaching 
to a failure of a local to abide by the decision of the majority in the 
central is that it loses its standing in the federation. The body 
itself cannot force any local to abide by a decision or contract. In 
fact, as employers understand this quite as well as the trade unionist, 
it is impossible for a general central labor union to do any collective 
bargaining. Unless a radical change should take place in the organiza¬ 
tion of central bodies, there is little hope that they will be able directly 
to undertake this most fundamental function of trade unionism. 

There are certain well-defined dangers and faults peculiar to central 
labor unions. A lay member of a strong central union, himself 
a keen observer, writes: “Jealousy, or a desire to pull a man down 
as soon as he seems to be getting a little higher than the common herd, 
is one of the things which prevents the central union from doing better 
work.” A struggle for some petty office will take up the time and 
attention of the whole union. 

The central labor union has no definite policy in regard to questions 
which it may discuss, except the very general idea that “everything 
concerning labor” has a place in its deliberations. In undertaking 
a variety of burdens the energies of the organization are dissipated. 
The time for discussion of legitimate questions is all too short at most. 
What is true of all popular bodies is especially true of this one. Its 
action is impulsive and spasmodic. 

1 Taken with permission from William M. Burke, History and Functions of 
Central Labor Unions , pp. 118, 122-24. (Columbia University Studies, 1899.) 


588 THE WORKER IN MODERN ECONOMIC SOCIETY 


c) PRESENT SUBORDINATION OF CITY AND STATE FEDERATIONS TO 
THE NATIONAL UNIONS, AS DESCRIBED IN 1913 1 

According to the original constitution of the Federation the 
national unions were allowed one delegate if their membership was 
less than 400, two delegates if 4,000, three if 8,000, four if 16,000, 
five if 32,000 and so on. Each local trades assembly or city federation 
was allowed a single delegate. In several of the sessions of the 
Federation prior to 1886 the voting strength of city federations and 
local unions was greater than that of the national unions. 

In 1886, when the Federation assumed its present title—the 
American Federation of Labor—the basis of representation was 
altered so as to exclude from representation all local unions of trades 
in which national unions existed. 

A year later, in 1887, the national unions made their control of 
the Federation unassailable by the provision that each delegate, 
except those of city or state federations, might cast one vote for every 
one hundred members which he represented. The representatives 
of city and state federations were allowed, as before, only one vote. 

By these changes the national unions were given an overwhelm¬ 
ingly large voting power. Moreover, it has become customary for 
the national unions to send as part, at least, of their delegation, 
important officials of the national union. The sessions of the Federa¬ 
tion are thus to a very considerable extent councils of the executives 
of the national unions. 

Throughout the whole period since 1886 the national unions have 
been more and more firmly resolved that the trade union movement 
should not be transformed into that semipolitical form which has 
always characterized it when the city federation and local union have 
had control of the national federation. 

The control of the A.F. of L. by the national unions has not only 
been important in itself, but through the Federation the national 
unions have acquired'kuch control as they now have over the city 
federations. In every time of labor unrest since 1827 city federations 
—known variously as trades unions, workingmen’s assemblies, 
district assemblies, or central bodies—have come into existence in 
the chief industrial centers. In the earlier periods of American 
trade union history these organizations called sympathetic strikes, 

1 Adapted with permission from G. E. Barnett, “The Dominance of the 
National Union in American Labor Organization,” Quarterly Journal of Economics , 
XXVII (1913), 461-74. 


UNION STRUCTURE AND ORGANIZATION 


589 


declared boycotts, and sustained strikers with financial aid. With 
the increasing centralization of the national unions it became intoler¬ 
able that their policies should be interfered with by local federations. 

The A.F. of L. has consistently required the city federations to 
maintain the principle that every local union should, if possible, be 
connected with a national union. The city federations, governed 
largely by local considerations, if left to themselves would frequently 
have offered aid and comfort to seceding and independent unions. 

The national unions have also gradually evolved a code of rules 
to be followed by the city federations in the conduct of their affairs. 
These rules relate to the boycott, to assessments for strikes, and to 
interference in collective bargaining—fundamentally important activi¬ 
ties of the city federation. 

The initiation and support of boycotts has always been one of the 
chief functions of the city federation. Comprising representatives 
of unions of all trades, the power of the city federation as a boycotting 
instrument has been very great. 

In 1901 a provision was inserted in the constitution of the American 
Federation of Labor forbidding city federations to originate boycotts 
and requiring them before indorsing boycotts proposed by local unions 
to investigate the matter and to effect if possible an amicable settle¬ 
ment. On several occasions city federations have been forced, on 
complaint of national unions, to call off boycotts. 

The assessment of local unions by city federations for the support 
of strikes has been the occasion of frequent complaint by the national 
unions. The stronger national unions finance their own strikes, and 
they strongly object to having their members required to support the 
strikes of local unions whose national unions are unwilling or unable 
to pay strike benefits. In some cases, however, it is permitted. 

Finally, the national unions have strongly resented the uninvited 
interference of city federations in the negotiations between local 
unions and employers. In 1898 a section was added to the constitu¬ 
tion of the Federation which provided that a city federation should 
not have authority to order a strike of any local union without the 
consent of the national union. In 1906 an additional section provided 
that a city federation must take no part in “the adjustment of wage 

contracts, wage disputes, or working rules of local union. ” 

without the consent of the national union. 

From the foregoing survey it will be seen that from the standpoint 
of the stronger national unions the city federations are merely the 



590 


THE WORKER IN MODERN ECONOMIC SOCIETY 


means of making more effective the boycott, of carrying on the 
propaganda for the union label, and of taking such political action as 
the needs of the labor movement may require. The less centralized 
national unions would be willing to make the city federations more 
important. Particularly is this true of many of the unions in the 
building trades. 

PROBLEMS 

1. What is the difference between a trade union and a fraternal order 
composed of workingmen ? Can you give any illustrations of fraternal 
bodies that have become trades unions ? How do you account for the 
transition ? 

2. What is a national union? What are its general powers over its con¬ 
stituent locals ? What powers do the rank and file have over it ? Illus¬ 
trate. 

3. What are the city federations of labor ? Of whom are they composed ? 
What functions do they perform and what powers do they possess? 
Compare the influence of the city federations with that of the national 
and international unions in the A.F. of L. How do you account for it ? 

4. At a recent convention of the A.F. of L. a rule was passed prohibiting 
any central labor council from calling any locals out on a sympathetic 
strike and reserving all such power for the international unions. Why 
was such a rule passed ? Do you approve of it ? Why or why not ? 

5. The constitution of the A.F. of L. provides that “No central labor 
union shall admit or retain in their councils delegates from any local 
organization that owes its allegiance to any other body hostile to any 
affiliated organization or that has been suspended or expelled by or is not 
connected with a national or international organization of their trade 
herein affiliated under penalty of having their charter revoked subject 
to appeal to the next convention.” Why do you believe such a rule 
was passed ? What effect does it have ? 

6. What are the state federations of labor ? Of whom are they composed ? 
What are their functions and powers ? 

7. It has often been remarked that city and state federations are much 
more radical than the majority of the international unions. How do 
you account for this ? 

8. What is the difference in membership between a craft union, an indus¬ 
trial union, and “the one big union” ? 

9. Compare the structure of trade union organization in the coal mines, 
the steel mills, the packing houses, the building trades, (a) under craft 
unionism, ( b ) under industrial unionism. 

10. How do you account for the fact that .the union movement in the main 
started on a craft basis of organization ? In what ways has the organ¬ 
ization of industry changed since then and what specific effects do you 
believe_this has had and will have upon the form of union structure ? 


UNION STRUCTURE AND ORGANIZATION 


S9i 


11. In the printing trades, it is generally necessary for the local unions to 

secure the consent of their respective international unions before they 
can strike, while this is not necessary in practically all of the building 
trades unions. How do you account for this ? Why is the control of 
the national unions over the locals generally quite weak in the building 
trades ? * 

12. Why should an international union desire to exercise control over the 
wage or strike policy of locals ? 

13. Through what agencies are the international unions able to bring pres¬ 
sure upon the local unions ? 

14. Why do some opponents of the policy of the existing international unions 
advocate the abolition of strike funds, sickness, accident and death 
benefits ? 

15. There was formerly only one union in the printing industry—’the Inter¬ 
national Typographical Union. There are now separate unions for 
the following crafts: compositors, pressmen (in turn with frequently 
separate locals for the pressmen proper and for the press-feeders), 
book-binders, photo-engravers, electrotypers, stereotypers. How do 
you account for this splitting up of a former industrial union into a series 
of craft unions ? Is the same tendency apparent in the building trades ? 
Is this the general process of industry ? Why or why riot ? 

16. Can you give an American illustration of material trade unionism ? 

17. What two definitions are sometimes given for industrial unionism? 
What is the difference between these in practice ? In the steel strike of 
1919, among the craft unions which participated in the organization 
work and the strike were the International Seamen’s Union, the Brother¬ 
hood of Electrical Workers, and the United Mine Workers. Why did 
they participate? Suppose the steel industry was to be organized 
industrially. Would these organizations merge into the new union ? 
Why or why not ? 

18. “Craft unionism results in union men being called on to ‘scab’ against 
their brothers in other crafts. The employers use one union to fight 
another.” What is meant by this statement? What grounds are 
there for it ? 

19. Why are most of the skilled craftsmen generally either opposed to or 
lukewarm toward industrial unionism? What would be the attitude 
of the unskilled and why ? 

20. Why are the “radicals” in the labor movement generally in favor of 
industrial unionism and why are the “conservatives” generally opposed ? 

21. What is meant by a “jurisdictional dispute” ? Give illustrations. How 
do they arise and what provisions are made for their adjudication? 
Would jurisdictional disputes be greater under a craft form of organiza¬ 
tion or under an industrial form ? Why ? 

22. What would be the difficulties of industrial unionism if applied to the 
building trades ? Why ? 


592 


THE WORKER IN MODERN ECONOMIC SOCIETY 


23. What tendencies toward the amalgamation of related trades under 
specific unions do you see ? Does this indicate a shifting from the craft 
to the industrial basis of organization ? Why or why not ? How far 
can such a fnovement go under the present constitution and composition 
of the A.F. of L. ? Why? 

24. Describe the various city federations of related trades and give illustra¬ 
tions. What are their powers? How do they differ from industrial 
unions? Why were they created? What power do the constituent 
unions retain ? 

25. What are the departments in the A.F. of L. ? Why were they created 
and what functions do they perform ? What power do the constituent 
international unions retain ? 

26. Would an industrial union be able to work out the details of the trade 
agreements in the various crafts in an industry as well as a group of 
trade unions, each representing a craft or a series of allied crafts ? Why 
or why not ? 

27. Should craft interests be represented in an industrial union ? How could 
they be so represented ? Work out some specific plans in detail. 

28. Which do you believe will become the dominant form, the craft or the 
industrial union? Justify your opinion in detail. 

29. What would be the ability of “the one big union” to negotiate specific 
trade agreements ? 

30. What is the local union? Of whom is it composed? Where does it 
generally meet and why ? 

31. What is meant by “the workshop local”? Does this mean meeting 
in the workshop? If you were a unionist would you favor holding 
meetings in the workshop ? Why or why not ? Would the workshop 
local incline toward industrial unionism or craft unionism ? Why ? 

32. What would be the probable effect of the workshop local upon the 
attendance at union meetings? Why? Upon the unions moving for 
the control of industry rather than as bargaining agencies for the sale 
of their labor? Why? 

33. How possible is it to use the workshop as the local: (a) in the steel 
industry, ( b ) the men’s clothing industry, ( c ) the trucking industry, 
(d) the building trades, (e) in blacksmithing, (/) in the barbering 
trade ? Why ? 

34. What is a “business agent,” “a walking delegate” ? How is he gener¬ 
ally chosen ? From what class is he recruited ? Do the workers need 
such representatives ? 

35. Who is the shop steward or shop chairman, and what are his general 
duties ? Is he preferable to the business agent ? Why ? 

36. Select some specific trade union and ascertain the powers possessed by 
the full-time salaried officials and account for them. How do you 
account for the differing powers of these officials: (a) in the building 
trades, (b) in trucking, (c) in the textile industry ? 


UNION STRUCTURE AND ORGANIZATION 


593 


37. Point out the unaccustomed strains and temptations to which the work¬ 
ingman raised to a full-time salaried position as a union officer experi¬ 
ences. 

38. By what methods could the unions improve the quality of their repre¬ 
sentatives ? 

39. How can the rank and file retain the control of fundamental policy and 
yet enjoy the service of technical experts ? 

REFERENCES FOR FURTHER READING 

Barnett, G. E., “The Dominance of the National Union in American Labor 
Organization,” Quarterly Journal of Economics , XXVII, 455-81 
Carlton, F. T., History and Problems of Organized Labor, chap, vi 
Cole, G. D. H., The World of Labour, chaps, vii and viii 
Glocker, T. W., The Government of American Trade Unions 
Hollander and Barnett, Studies in American Trade Unionism, chaps, ii 
and iii 

Janes, G. M., The Control of Strikes in American Trade Unions 
Savage, M. D., Industrial Unionism in the United States 
Webb, S., and B., Industrial Democracy, Part I 




CHAPTER XX 

UNION POLICIES AND METHODS 

i. TRADE UNIONS AS THE AGENCIES FOR COLLECTIVE 

BARGAINING 1 

In all spheres of activities in which employer and citizens generally 
have any matter in which their interests are involved, they not only 
avail themselves of appearing by counsel of their own choosing, but 
they are guaranteed that right by the Constitution. The claim of 
the workers is founded upon the same principle—the right to be 
represented by counsel. 

Collective bargaining in industry does not imply that wage 
earners shall assume control of industry, or responsibility for financial 
management. It proposes that the employees shall have the right 
to organize and to deal with the employer through selected representa¬ 
tives as to wages and working conditions. Among the matters that 
properly come within the scope of collective bargaining are wages, 
hours of labor, conditions and relations of employment; safety and 
comfort regulations. 

Q.: How is this accomplished? 

A.: The employees in their union appoint a committee to draw 
up new wage scales and working conditions. These are reported to 
the union for consideration. Then in regular meeting each question 
is taken up and discussed from every angle. Finally the union agrees 
upon a wage scale and working conditions to submit to the employer. 
A committee for this purpose is selected which meets the employer 
or his representative and discusses the desires of the employees col¬ 
lectively through their union. 

Q.: Does this committee have full power to act ? 

A.: No. It must report back to the union. If the report is 
satisfactory, the union approves and an agreement for a stated period 
is signed by both parties. If unsatisfactory, further conferences with 
the employer are held until an agreement is reached. 

Q.: Can unorganized employees bargain collectively ? 

A.: Not with a certainty that they will be treated fairly. 

Q.: Why? 

1 Adapted with permission from a pamphlet by Samuel Gompers, “ Collective 
Bargaining.” (American Federation of Labor, Washington, D.C., 1920.) 

594 


UNION POLICIES AND METHODS 


595 


A.: Men employed as individuals always retain the fear that they 
are to be discharged whenever the employer sees fit. Each is- sus¬ 
picious of the other. Therefore when the unorganized employees all 
meet together to decide what they shall ask the employer, they become 
cowardly for fear some other employee will report them. 

2. THE STANDARD RATE 

a) A STATEMENT BY THE WEBBS 1 

Although the standard rate is a minimum, not a maximum, the 
establishment of this minimum necessarily results in a nearer approxi¬ 
mation to equality of rates than would otherwise prevail. Trade 
union officials who have had to construct a piecework list, or to extend 
such a list from one shop to the whole town, or from one town to the 
whole trade, know that in order to secure a standard list of prices, they 
have had to pare down the rates hitherto enjoyed by particular shops 
or even particular towns. 

This conception of a standard rate is, as we need hardly explain, 
an indispensable requisite of collective bargaining. Without some 
common measure, applicable to all the workmen concerned, no general 
treaty with regard to wages would be possible. This conception 
of a consistent standard of measurement the trade union seeks to 
extend from establishments to districts, and from districts to the 
whole area of the trade within the kingdom. 

This trade unionist insistence on a standard rate has been the 
subject of bitter denunciation. The payment of “bad and lazy 
workmen as highly as those who are skilled and industrious,” “setting 
a premium on idleness and incapacity,” “destructive to the legitimate 
ambition of industry and merit,” that “worst kind of Communism, 
the equal.remuneration of all men,” are only samples of the abusive 
rhetoric of capitalists and philosophers on the subject. 

Such criticisms are beside the mark. A very slight acquaintance 
with trade unionism would have shown these writers that a uniform 
standard rate in no way implies equality of weekly wages, and has 
no such object. 

The misapprehension arises from a confusion between the rate 
of payment and the amount actually earned by the workman. What 
the trade union insists on, as a necessary condition of the very existence 
of collective bargaining, is a standard rate of payment for the work 

1 Adapted with permission from Sidney and Beatrice Webb, Industrial Democ- 
racy, pp. 280-85. (Longmans, Green & Co., 1914-) 


•596 


THE WORKER IN MODERN ECONOMIC SOCIETY 


actually performed. But this is consistent with the widest possible 
divergence between the actual weekly incomes of different workmen. 
Thus we have the significant fact that the standard rate insisted on 
by the great majority of trade unionists is, not any definite sum per 
hour, but a list of piecework prices. When the standard rate takes 
the form of a schedule of piecework prices, it is clear that there can 
be no question of equalising the actual earnings of different workmen. 
One basketmaker or one coalminer may be earning two pounds a 
week, whilst another, receiving the same standard rate and working 
the same number of hours, may bet less than thirty shillings. 

Nor can it be assumed that in the industries in which the trade 
union rate is not based on piecework, but takes the form of a definite 
standard wage per hour, this necessarily implies equality of remunera¬ 
tion Even where workmen in such trades put in the same number 
of hours, their weekly incomes will be found to differ very materially. 
Thus whilst ordinary plumbing, bricklaying, and masonry is paid 
for at uniform rates per hour, directly the job involves any special 
skill, the employer finds it advantageous to pay a higher rate, and the 
trade union cordially encourages this practice. 

We do not wish to obscure the fact that a standard rate on a 
timework basis does, in practice, result in a nearer approach to 
uniformity of money earnings than a standard rate on a piecework 
basis. Nor is there any doubt that a considerable section of the 
wage-earning class have a deeply rooted conviction that the con¬ 
scientious, industrious, and slow mechanic ought in equity to receive 
no less pay than his quicker but equally meritorious neighbor; more 
especially as the normal earnings of even the quickest mechanic do 
not amount to more than is demanded for the proper maintenance of 
his household. 

b) THE UNION RATE AND ACTUAL WAGES 1 

The standard minimum rate, as has already been several times 
noted, is in intent only a minimum, not a maximum. Union officials, 
in answer to the charge that the union wishes all members to be paid 
at the same rate, explain that the purpose of the union is to establish 
a rate below which no regular journeyman may go, and above which 
the employers are expected to grade the better man. 

Provisions for payment above the minimum .—A small group of 
unions provide specifically for payments above the minimum. The 

1 Adapted with permission from David A. McCabe, The Standard Rate in 
American Trade Unions , pp. ioo ff. (Johns Hopkins Studies, Vol. XXX.) 


UNION POLICIES AND METHODS 


597 


wage system usually followed by the barbers has, for instance, both 
a minimum and a differential feature. The rates usually set include 
a minimum weekly wage, and a percentage, usually fifty, of all that 
the journeyman takes in over a certain amount. Some classes of 
drivers, notably milk drivers and brewery drivers, also stipulate in 
their agreements for a commission in addition to the minimum wage. 

Union policy and the minimum .—On the other hand, there are in 
many unions policies or attitudes with reference to the relation of 
output and wages which discourage the payment of wages above the 
union minimum. The union rule or attitude in these cases does not 
have its origin in any opposition to the receiving of wages above the 
minimum. The prevention of “rushing” and of increasing the 
output expected of the average workman as “a day’s work” is the 
direct end aimed at. 

One union, the Stone Cutters, goes so far as to forbid any member 
receiving more than the other men on the same “job.” The officers 
defend this rule on the ground that it is the only way to prevent a 
few men in return for twenty-five or fifty cents more a day from 
setting a swifter pace for the other and so increasing the day’s output 
demanded for the minimum wage. A few unions have specific 
regulations against rushing or setting a pace. The result of this is 
that in trades where speed can be compared men do about the same 
amount of work, and payment above the minimum is usually for 
general competency or workmanship of a higher grade and not for 
speed . 1 

The union opposition to “premium” and “bonus” plans is also 
a barrier in the way of certain workers’ obtaining more than the 
minimum rate. The essential feature of the “premium” and “bonus” 
plans is that the worker for extra output receives pay above his daily 
time rate. In some cases the extra pay is given if he exceeds a stipu¬ 
lated output, which is usually the average attained before the introduc¬ 
tion of the plan; in other cases, the extra pay is given only if he 
reaches a specified output considerably in excess of the previous 
average output. The unions oppose the premium and bonus systems 
on two grounds. In the first place, the unions object to these systems 
because they are intended to stimulate the worker to exceed the 
amount he has been producing. This stimulus is especially strong 
when the bonus is paid only if a high specified output is reached, 
and systems with such a provision are particularly obnoxious from the 

1 The “rusher,” the unions contend, relies simply on his physical strength to do 
a large amount of work of one kind,- and usually is poor at other kinds. 


5q8 the worker in modern economic society 


anion standpoint. The unions assume that the production of the 
increased output will require such an increase of effort and nervous 
strain as to injure the health of the workers. Moreover, it is feared 
that after a large output has been reached by some workers under 
the stimulus of the extra payments, the new output will become the 
task required from all, and that then the premiums or bonuses will 
be greatly reduced or withdrawn or offered only as a reward for still 
more intense effort, so that the daily tasks will have been considerably 
increased without an appreciable permanent increase in the daily 
rate. The second ground of opposition by the unions is that the 
worker is offered a lower rate per piece for the additional output 
than he has been receiving. It is for this reason chiefly that unions 
almost without exception prefer the straight piece system to premium 
or bonus systems. 

Wages and efficiency .—Very little seems to be known as to the 
differences in efficiency among men engaged in the same kind of 
work. It is safe to assume, however, that even where the union does 
not discourage large outputs the better men do not receive additional 
wages commensurate with their superior capacity. 

Of most time-working unions it can be said, however, that the 
variations in efficiency within the membership are not as wide as 
among men in the same trades outside the union. The mere insistence 
on a minimum rate which is intended to be almost as much, if not as 
much, as the average member can successfully demand, necessarily 
excludes from the union men much below the average of competency. 
Such men cannot obtain regular employment at the union rate, and 
it is consequently useless for them to retain union membership. 

c) RATE GROUPING BY COMPETENCY 1 

The suggestion has often been made to time-working unions that 
instead of setting a single rate for all men engaged in the same kind 
of work they should divide their members into classes on the basis 
of competency and fix a separate rate for each class. The employers 
have urged that such a plan would remove the chief defect in the 
minimum rate, that is, the necessity which the employer is under of 
paying the less competent men the same rate as the good, average 
man. Within the unions the proposal has been advocated on the 
ground that it will allow the less proficient members to obtain work 

1 Adapted with permission from David A. McCabe, The Standard Rate in 
American Trade Unions, pp. 94-106. (Johns Hopkins University Studies, Vol. 
XXX.) 


UNION POLICIES AND METHODS 


599 


and at the same time make it possible to maintain a high minimum 
for the better men. This policy in rating has naturally been most 
strongly urged upon those unions in which the differences in efficiency 
among members doing the same work are very large. 

The classification of men on the basis of differences in competency 
has not, however, commended itself generally to the unions. 

The general rejection by the unions of the system proceeds from 
the belief that it tends to reduce wages through the competition of 
the more poorly paid with the better paid workmen. It is extremely 
difficult to assign members to their grades so exactly as to insure that 
some men shall not be given a lower rate by the union than the general 
run of members of the same capacity are required to demand. It is 
difficult, too, to insure that men of lower grades shall be transferred 
to a higher grade when their competency rises above that of their 
grade. The unions consider it a further objection that the mainte¬ 
nance of a rate or rates below the point at which a single minimum 
would be set makes for the retention in the trade of a class of inefficient 
or partially trained workmen. 

The history of grading systems among the Stone Cutters illustrates 
the difficulties. The Stone Cutters at one time made wide use of the 
system of classifying men according to competency and setting a 
separate minimum rate for each grade. In the early nineties many 
locaF unions had more than one rate of wages for the same kind of 
work. The minimum was practically a maximum for all but their 
first-class men and very few of these received more than the minimum 
rate for their class. In many cases it was the expectation of the 
local union that those below the first class would be in the minority. 

From about 1895 opposition to the plan of having “more than one 
rate of wages” steadily increased in the national union. At the time 
that New York adopted the three-rate system other local unions 
were reducing the number of classes from three to two or insisting on 
a single minimum rate. The chief ground of opposition was that men 
would work for less wages than their work warranted in comparison 
with that of their fellows. There was complaint that second grade 
men did more work in proportion to their pay than first grade men, 
and there was a tendency to limit the amount of work that second and 
third class men should be allowed to turn out. It was also charged 
that the system created jealousy and dissension in the membership. 
In November, 1899, a member of the national executive board urged 
that advantage should be taken of the approaching revision of the 


6oo 


THE WORKER IN MODERN ECONOMIC SOCIETY 


constitution to abolish the “two rate of wages” system. He argued 
that every workman competent enough to be admitted to the union 
was a first class workman and that the local unions should base their 
rates on the assumption that every union member was a first class 
workman. When the constitution was revised in 1900 a clause was 
inserted that “this Association thoroughly discourages the principle 
of more than one rate of wages.” Although some local unions con¬ 
tinued to follow the plan for several years its practical abolition has 
been secured. 

In some unions there are systems of rating which closely resemble 
grouping according to competency. Several unions allow young men 
just out of apprenticeship to work for three or six months or a year 
at a specified rate lower than the regular minimum. 

By the creation of a separate class of “improvers” some unions 
have avoided the dilemma of either requiring the payment to a 
recognizedly incompetent man of the minimum rate or of excluding 
him from the union and forcing him to work for what he can get in 
competition with union men. These unions allow a small number of 
men below the level of competency and too old for an additional year 
or more of apprenticeship to become members as “improvers” and 
work a specified period under instruction for a lower rate. Improvers 
are found more frequently in the building trades than in any of the 
other groups. In most trades .there is a feeling against them. 

Nearly all unions permit members who have become unable to 
command the minimum rate because of old age or physical infirmity 
to work for what they can get. , In very few local unions does the 
number of exempted men exceed 5 per cent of the membership, and 
the exemption is made on a much more ascertainable basis than 
competency. 

d) THE NORMAL WORKING DAY 1 

In modern industry the settlement of the hours of labor differs 
in an essential particular from that of the rate of payment for the 
work done. In the absence of any form of collective regulation, the 
rates of wages are determined by individual bargaining between the 
capitalist employer and his several “hands” and a distinct and 
varying agreement as to the amount of remuneration is made with 
each operative in turn. This is seldom the case with regard to the 

length and distribution of the working day.Instead of each 

individual being able to work as he chooses, the whole establishment 

1 Adapted with permission from Sidney and Beatrice Webb, Industrial Democ¬ 
racy, pp. 325-34. (Longmans, Green & Co., 1914). 


UNION POLICIES AND METHODS 


601 


finds itself by the nature of things, subject to a common rule. In a 
textile mill, a coal mine, or a great building operation, it is economically 
impossible to permit the individual workman to come and go as he 
feels inclined. To arrange particular hours of labor to suit the 
varying desires, capacities and needs of the different operatives 
would be obviously incompatible with the economical use of steam 
power, the full employment of plant, or the highly organized special¬ 
ization brought about by division of labor. There is no longer a 
choice between idiosyncracy and uniformity. A common standard, 
compulsory in its application, is economically inevitable. The only 
question is how and by whom the uniform rule shall be determined. 
Under the circumstances of modern industry, the employer’s decision, 
because of his costly plant, will perpetually be biased in favor of 
lengthening the working day. If each workman is free to conduct 
what bargain he chooses with regard to his working hours, the employ¬ 
ers will, it is contended, be able to compel all the others to accept 
the same longer working day. 

Trade unionists, moreover, are convinced that unlimited hours 
have an insidious influence upon wages. When the hours are increased, 
say from fifty-four to sixty, it seems at first a clear gain to the men, 
who make more money. Presently the foreman announces a io per 
cent cut in rates. The men grumble but as most of them will now be 
making the same amount weekly as before, they will put up with it. 
The trade union official will put the argument in a more systematic 
form. When an employer engages a workman at so much a week, 
the length of the working day clearly forms an integral part of the 
wage contract. A workman who agrees to work longer time for the 
same money underbids his fellows just as surely as if he offered to 
work the same time for less money. He sells each hour’s work at a 
lower rate. The same tendency to use the longer hours to reduce 
piece-rates is also present. 

See also chapter vii, Section B, “Bargaining Factors.” 

3. THE CLOSED SHOP 

- a) CLOSED SHOP DEFINED 1 

A union labor interpretation of the term “the closed shop” as 
published in the official organ of the Bridge and Structural Iron 
Workers’ Union is as follows: 

1 Taken with permission from Pamphlet 26, p. 140. (National Association of 
Manufacturers, 30 Church Street, New York City.) 



602 


THE WORKER IN MODERN ECONOMIC SOCIETY 


“Closed shop,” then, is the term for a shop, factory, store, or other 
industrial place where workmen cannot obtain employment without being 
members in good standing of the labor union of their trade. 

This is demanded by the unions. 

Objecting to working in co-operation with scabs, rats, strike-breakers, 
or other non-union workmen, they insist that the shop shall be closed 
against all employees who, not already belonging to the union of their 
trade, refuse to join it. 

If the union is able to coerce the employer, or he is friendly enough to 
yield without coercion, this demand is granted, and that establishment is 
consequently a “closed shop.” 

But if the employer will not yield without coercion, and the union is 
unable to coerce him, then non-unionists may obtain employment and the 
establishment is consequently known as an open shop. 

b) THE RIGHT OE ORGANIZATION AND THE RIGHTS OF THE 

UNORGANIZED 1 

The right of workingmen to organize themselves into societies 
for their mutual improvement and advancement has never been 
denied, and it should not be. 

But the right of any class of citizens to organize into societies 
for the further purpose of compelling others either to join such societies 
or starve has always been denied, and always should be. 

The Anthracite Coal Strike Commission says: 

The rights and privileges of non-union men are as sacred to them as the 
rights and privileges of unionists. The contention that a majority of the 
employees in an industry by voluntarily associating themselves in a union 
acquire authority over those who do not so associate themselves is untenable. 

Our language is the language of a free people and fails to furnish any 
form of speech by which the right of a citizen to work when he pleases, for 
whom he pleases, and on what terms he pleases, can be successfully denied. 

The principle involved .—It should always be remembered that a 
principle is involved. A principle which is the very marrow of 
Christian life and upon which all individual effort and progress is 
based. 

Every time an employer of labor willingly refuses a boy an oppor¬ 
tunity to learn a trade because a labor union says the boy shall not 
have it, that moment he compounds a felony. When he refuses to 
deal in wares because a labor union has placed its brand of disapproval 
upon them, that moment he brands himself a coward and becomes 
unworthy of patronage of decent citizens. 

1 Adapted with permission from Pamphlet 26. (National Association of 
Manufacturers, 30 Church Street, New York City.) 


UNION POLICIES AND METHODS 


603 


Our government cannot stand nor its institutions endure if the 
Gompers-Debs ideals of liberty and freedom of speech and press 
are allowed to dominate. 

Let there be no maudlin sentiment over this question of organized 
labor, and it will be but a short time before its militant temple will 
crumble. 

Let the militant labor unions cut out the closed shop, restriction 
of apprentices and output, and give value for wages received. 

Let them eliminate intimidation, coercion, and murder from 
their catechism. 

Let them relegate the boycott to barbarism, and eliminate the 
picket. 

Let them encourage, rather than prevent, personal effort as a 
means of personal advancement. 

The purpose of a labor union should not be to quarrel with the 
natural law of economics, which is as irrevocable as the law of gravita¬ 
tion. 


c) CLOSED SHOP AND OPEN SHOP TERMINOLOGY 1 

/ > 

“Closed shops ” and 11 open shops .”—The common conception of 
the closed shop is that it is a shop in which non-union men cannot 
obtain or retain employment. It is generally thought that every 
union shop, i.e., a shop in which the union is recognized, is a “closed 
shop.” Instances of union shop where no closed chop obtains are 
ignored and the term “recognition,” “union shop” and “closed 
shop” are thought synonymous. By way of contrast, all shops that 
are not “closed shops” in the above sense, and do not involve recogni¬ 
tion, are thought to be “open shops,” the presumption being that 
they are open to both union and non-union men without discrimina¬ 
tion. The presumption is too sweeping, for it ignores the instances 
of shops where discrimination works the other way—against union 
men. Investigation clearly shows that many so-called “open shops” 
are not “open” and many union shops are not “closed,” and that this 
simple terminology of “closed” and “open” shop is confusing and 
inadequate. 

A practicable terminology would begin with two large classes—the 
“union shop,” in which the union is recognized and admitted to 
negotiations on behalf of the workmen, and the “non-union shop,” 
in which the union is not recognized and is not admitted to such 

1 Taken with permission from Payl Studensky, New Jersey , VIII, 21-23. (New 
Jersey State Chamber of Commerce, Newark, November, 1920.) 


604 THE WORKER IN MODERN ECONOMIC SOCIETY 

negotiations; and it would subdivide each class into subclasses 
according as they are closed, preferential or open toward the union 
men or non-union men respectively and according to other important 
factors. At least nine kinds of shop can thus be indicated. 

I. The non-union shop 

1. Closed anti-union shop 

2. Preferential anti-union shop 

3. Open non-union shop without shop committee 

4. Open non-union shop with shop committee 
II. The union shop 

5. Open indirect union shop 

6. Open union shop 

7 Preferential union shop 

8. Closed union shop of an open union 

9. Closed union shop of a closed union 

Non-union shops .—In the “closed anti-union shop” union men 
are not admitted except as a temporary expedient. They must 
give up membership to be able to obtain or retain their employment. 
The most apparent type of closed anti-union shop is that enforced 
by means of individual contracts, which the employees must sign 
before receiving employment, or a permission to remain, and which 
contain a clause forbidding membership in the union. But many 
shops are closed to union men also without such contract. 

The “preferential anti-union” type is distinguished by the 
preference given to non-union men, with the result that the union 
men are kept in a minority. The lines of demarcation between the 
preferential and closed type are very slight. The employer in the 
closed anti-union shop would at times, when the danger of unionization 
grows slighter, lower the bars and change to a preferential policy; 
and, vice versa, a preferential anti-union shop would, when the union 
is engaged in an organizing drive, change to a “closed door” policy. 

The anti-union shop of closed or preferential kind obtains in 
industries which have been or are being organized and where the 
employer is engaged in keeping the union out by aggressive methods. 
It is the “open shop” which is not open. The employer may want 
to maintain a true “open shop” and not discriminate, but he cannot 
do it, for if he did, if he permitted a large number of union men, 
and especially the active union men, in the shop and allowed the union, 
through them, to conduct its organizing work, he would soon have the 
majority, if not all, his men organized, a strike engineered and perhaps 


UNION POLICIES AND METHODS 


605 


union recognition from him secured. Thus, so long as the union exists 
in the industry and the employer seeks to keep it out of his shop, 
he must, all declarations and intentions to the contrary, maintain a 
policy of anti-union discrimination. 

The most conspicuous anti-union shop is the one enforced not 
merely by the individual employer, but by the association of employers 
for the benefit of all association members. The association employ¬ 
ment bureau, through which all hiring is done and which investigates 
and keeps the records of all applicants and employees and which 
culls out from among them the active union men and other 
undesirables, becomes one of the most prominent instrumentalities 
of anti-union discrimination. The anti-union shop is the usual type 
of “open shop” enforced by “open shop campaigns.” The reason 
for this lies in the fact that the latter manifest themselves through 
a lockout of the union and require in the long run anti-union dis¬ 
crimination to safeguard the lockout and the policy of “non¬ 
recognition.” 

The “open non-union shop” is one in which, alongside with non¬ 
recognition, no discrimination is practiced. It obtains very largely 
in industries which have been little, if at all, organized. It ob¬ 
tains also, but usually as an exception or as a temporary condition, 
in industries where the union had or has some standing. In the 
latter cases it is due either to the exceptional intelligence of the 
management, which is able to forestall “recognition” without using 
crude coercion, or to the protection afforded it by the government, 
as for example, during the war, when, under the supervision of the 
War Labor Board and other agencies, the principle of “no discrimina¬ 
tion” was imposed on both employers and the unions; or to the fact 
that the union has not yet started its organizing drive. Of its two 
subclasses, that provided “with shop committee” presents a more 
evolved type, for the shop committee affords an opportunity of limited 
collective bargaining and even indirect negotiation between the 
unrecognized union and the management through the delegates on 
the shop committee. The open non-union shop is the true open shop, 
only of non-union character. 

Union shops .—Before starting with the discussion of the five 
forms of union shops, it may be well to point out that the first two 
forms which are “open” are prevalent in industries which are com¬ 
petitive only to a slight degree, if at all, and are fairly stable, whereas 
the “preferential” and “closed” union shops obtain pre-eminently 


6 o6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


in highly competitive and fluctuating industries. There is a deep 
reason for this peculiar distribution which it is impossible here to 
discuss, but which gives a key to an understanding of the factors 
which stimulate one or the other form. 

The “open indirect union shop” is one where the union is recog¬ 
nized only indirectly, as for example, through the instrumentality of a 
public agency which acts as the intermediary between the union and 
the employer, and where no discrimination is practiced. It is illus¬ 
trated by the case of the packing industry in Chicago, where a three- 
cornered agreement obtains, the government making it with the 
packers on one hand and with the unions on the other. The two 
sides plead their case before the impartial tribunal, constituted by 
Judge Alschuler, who administers the agreement. They do not deal 
directly with each other. 

In the “open union shop” the union is recognized and yet no 
discrimination either way is allowed. Prominent instances of the 
latter are the railways, where about 2,000,000 union men work under 
the rule of “no discrimination,” with their unions generally recog¬ 
nized; many yards in the shipbuilding industry, of which the 
Bethlehem Shipbuilding Company is a conspicuous example; the 
Schenectady plant of the General Electric Company, employing 
over 20,000 workmen; the American Locomotive Company; some of 
the street railways and telephone companies; the anthracite mine 
fields; the Rochester clothing market; the United States arsenals 
and some other national, state and municipal works. In some of these 
instances the open union shop has been maintained for twenty, 
thirty years and even longer, without transforming into a closed union 
shop, and has proved so eminently satisfactory to the union that they 
emphatically declare that they do not want the “closed shop.” 
The two types of union shop just described are true “open shops,” 
only of union character. 

The “preferential union shop” is distinguished by the fact that 
alongside with recognition a preference is tendered to union members. 
Non-union men can work in the shop, but they must be either better 
workmen than the union men or the union must be unable to furnish 
to the employer the needed quota of workmen. The arrangement is 
predicated on the consideration of the fact that the union men are 
parties to the agreement which stabilizes the industry, and ought, 
therefore, to receive preference. Conspicuous examples of this type 
are the Chicago Clothing Market, and especially the Hart, Schaffner 


UNION POLICIES AND METHODS 


607 


& Marx establishment, where this arrangement has operated for the 
last ten years with eminent satisfaction to both sides and has not 
resulted in the “closed shop” condition. On the other hand, a 
conspicuous example of its failure and transformation into a “closed 
union shop” is afforded by its operation in the ladies’ garment 
industry of New York City. 

The “closed union shop” is what is commonly referred to as the 
“closed shop.” It does not necessarily require that a man be a union 
man before he is hired. Very often the arrangement permits the 
employer to hire any man he desires, but the man must become a 
member of the union within a certain time, usually a week or two 
weeks. Men found guilty of serious offense against the union are 
not admitted to the union, and, therefore, cannot remain in the 
shop. 

The closed union shop must be divided into two classes according 
as it is enforced by an “open union,” which keeps its membership 
doors wide open, or by a “closed union,” which keeps its membership 
doors fairly closed. The “open union” type of the closed union shop 
tends to eliminate destructive competition among the workmen by 
including the competitors in the union. The “closed union” type, 
on the other hand, tends to do it by eliminating the competitors 
from the industry. The former tends to extend the benefits of union 
standards to all the workmen, the latter to impose a special privilege 
upon a certain group. The former affords to the employer a wide 
supply of labor, the latter a restricted one. 

A typical example of the closed union shop of an open union is 
the shop arrangement of the miners in the bituminous coal industry, 
the ladies’ garment workers and the men’s clothing workers in New 
York City. A typical example of the closed union shop of the closed 
union is the shop arrangement of the United Hatters (a highly skilled 
trade) and of various crafts in the building industry and some 
branches of the printing industry. Even the most conspicuous types 
of open and closed union maintain a certain degree of elasticity in the 
margin of their open or closed door, according as the times are “busy” 
or “slack.” And between them are many unions with intermediate 
forms of “open” or “closed” door. Consequently, there are consider¬ 
able variations in that respect as between various closed union shops. 
The closed union shop of the pure closed union represents the extreme 
point of union shop just as the pure closed anti-union shop represents 
the extreme of the non-union shop. 


6 o8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


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UNION POLICIES AND METHODS 


6 o 9 


d) THE “open” SHOP AS OPERATED BY ANTI-UNION MANUFACTURERS 1 

On January 21, 1921, a National Conference of State Manu¬ 
facturers’ Associations was held in Chicago. One of the principal 
objects of this conference was to forward a national open shop drive. 
The following letter appears in the proceedings of this convention: 

“The factory of which I am the head has no difficulties in relation 
to labor. We have signs in every department reading as follows: 
* This Is an American Shop Run on American Plan by Americans. ’ 
As soon as a person reads this sign he knows at once where he stands 
on Collective Bargaining, Closed Shop, Industrial Democracy and 
all of the other hot-air topics.” 

During the debate on the open shop one of the delegates, Mr. 
Gillette, made the following statement: 

Mr. President, I suppose I am somewhat heretic. It is unpopular to 
say you don’t believe in the open shop, but I confess I do not quite know 
what the open shop means. To my mind it is a good deal of a question of 
non-union shop or unionized shop, and I hate to be a hypocrite under a resolu¬ 
tion or anything else, or to vote or declare in favor of open shop when my own 
policy is not to carry that out, but to hit the head of the radical in my shop 
whenever he puts it up. 

I don’t think it is a practical thing to do, but you can go on and you 
can declare from now until Doomsday, and pass resolutions declaring this 
and that day in and out, and as to the open shop, if you attempt to carry it 
out with a mixture of union men and non-union men in your plant, you are 
inviting trouble and disaster. 

Mr. Gillette further said very frankly: 

There is nothing more disputed than the definition of the open shop. 
Does it mean simply this, that if I vote for this resolution and go back home 
—I am just doing this to make a little trouble, Mr. Chairman—does it 
mean when a man comes to our employment office for employment that 
I should instruct my employment manager not to ask him if he is a union 
man or a non-union man, because we have declared for the open shop here ? 
Must I tell him that you must not discriminate against the action taken 
here ? 

The resolution adopted at this meeting reads: 

Whereas, it is recognized as fundamental in this country that all law- 
abiding citizens or residents thereof have the right to work when they please, 
for whom they please, and on whatever terms are mutually agreed upon 

1 Taken with permission from pamphlet by Savel Zimand, “The Open Shop 
Drive.” (Bureau of Industrial Research, New York, 1921.) 


6 io 


THE WORKER IN MODERN ECONOMIC SOCIETY 


between employee and employer and without interference or discrimination 
upon the part of others. 

Now therefore be it resolved, that we hereby express our purpose to support 
these fundamental principles of American plan of employment by the 
maintenance of the open shop. 

Resolved, further, we urge upon our members to secure by discussion and 
education the active support of workers, merchants, bankers and professional 
men, and all other elements of their respective communities, in favor of 
American ideals and the open shop. 

And Mr. A. M. Glossbrenner, of the Indiana Manufacturers’ 
Association, tells us how the resolution should be interpreted: 

I happen to be running a shop which I think is similar to yours, Mr. 
Gillette, in the manufacturing business, in that we will not employ an indi¬ 
vidual in any part of the plant that does not sign an individual contract 
in which it is expressed that he is not and will not become a member of a 
labor organization while in our employ. 

I am in favor of this resolution because the interpretation I give to it 
is that the open shop means to me that I can employ whomever may please, 
as an individual employer. That is the definition I understand under that 
resolution. 

. e) MR. DOOLEY ON THE OPEN SHOP 1 

“ ‘ What’s all this that’s in the papers about the open shop ? ’ 
asked Mr. Hennessey. 

“ ‘ Why, don’t ye know ? ’ said Mr. Dooley. ‘ Really, I’m surprized 
at yer ignorance, Hinnissey. What is th’ open shop? Sure, ’tis 
where they kape the doors open to accommodate th ’ constant stream 
av’ min comin in t’ take jobs cheaper than th’ min what has th’ jobs. 
‘Tis like this, Hinnissey: Suppose wan av these freeborn citizens is 
workin ’ in an open shop f ’r th ’ princely wages av wan large iron dollar 
a day av tin hour. Along comes anither son-av-gun and he sez t ’ th ’ 
boss, “Oi think Oi could handle th ’ job nicely f ’r ninety cints.” “ Sure,” 
sez th ’ boss, and th ’ wan dollar man gets out into th ’ crool woruld 
t’ exercise hiz inalienable roights as a freeborn American citizen an’ 
scab on some other poor devil. An’ so it goes on, Hinnissey. An’ 
who gits th’ benefit? Thrue, it saves th’ boss money, but he don’t 
care no more f’r money thin he does f’r his right eye. 

“ ‘ It’s all principle wid him. He hates t’ see men robbed av their 
indipindence. They must have their indipindence, regardless av 
anything else.’ 

1 From F. P. Dunne in the Literary Digest, LXVII (November 27, 1920). 


UNION POLICIES AND METHODS 


611 


“‘But,’ said Mr. Hennessey, ‘these open-shop min ye menshun 
say they are f’r unions iv properly conducted.’ 

“‘Shure,’ said Mr. Dooley, ‘iv properly conducted. An’ there 
we are: an’ how would they have thim conducted? No strikes, no 
rules, no contracts, no scales, hardly iny wages, an’ dam few 
mimbers.’” 

/) THE ETHICS OF THE CLOSED SHOP 1 

Granted, that unionism in its main outlines is a good thing, 
what should be our attitude toward the policy of the closed shop ? 

The argument of the employer is twofold. He holds that the 
closed shop is unfair both to the individual workman and to the 
individual employer, unwarrantably restricting the liberty of each. 

Why, he asks, should a man be compelled to join the union before 
he can secure work in a trade? If the union really is so helpful as 
its advocates would have us believe, let it increase its membership by 
the weight of its own merits, not by coercion. If a given workman 
resists the leveling process of the union, preferring to remain outside 
and forego its benefits together with its restrictions, that is his own 
affair. 

On the other hand, the employer in his choice of workmen should 
be equally free. If he is restricted to union labor only, he is practically 
robbed of his right to discharge. An unscrupulous union can hold 
him at its mercy. By threats of strike, it can compel him to retain 
inefficient and insubordinate workers, and in a thousand ways keep 
increasing its demands, decreasing his daily output, and interfering 
with his business policy. The closed shop means an all-round hamper¬ 
ing of business initiative and efficiency. 

The union, meanwhile, marshals its arguments as follows: In the 
first place the so-called “open-shop” seldom really is open. It 
constantly tends to discriminate against union men. Under cover of 
“inefficiency” or “insubordination” or some similar complaint, it is 
the common practice of open-shop employers to discharge men 
prominent in union activities and to replace them with non-union 
labor. Thus, under the guise of the open shop system, many a plant 
has been stripped of its union workers and reduced once more to a 
state of individual bargaining. 

In the second place, is it true that the non-union man is so deserv¬ 
ing of our sympathy? Is not his right of individual freedom of 
contract in direct contravention to the rights of his fellows within the 

1 Adapted from Paul H. and Dorothy Douglas, “Closed vs. Open Shop,” 
Oregon Voter, II (November 3, 1917), i 54 ~ 59 - 


6l2 


THE WORKER IN MODERN ECONOMIC SOCIETY 


union ? If he is accepting wages that are below the union rate, he is 
inevitably pulling down that rate. If his wages are equivalent to 
the union rate, he is receiving something that he has not earned; 
for it is the efforts of the union that have made the wages in his industry 
what they are. Others have labored and he has entered into their 
labor. Why should he not be required to support the organization 
that is doing so much for him? If he does not support it, other 
laggards who are already in the organization, seeing his easy success, 
will begin to drop out, and soon the union will disintegrate. 

Before weighing the merits of these two sets of arguments, it is 
necessary to draw a distinction to which the parties to the dispute 
seldom advert—namely the distinction between two types of union, 
the closed and the open. 

The closed union is one which artificially restricts its membership. 
It may do this by any one of several devices. The commonest perhaps 
is the charging of an exorbitant initiation fee; the next in frequency 
is the lengthening of the apprenticeship period beyond what is required 
adequately to learn the trade; and the third is the actual limitation 
of the number of apprentices allowed to enter training. Thus, by 
curtailing the number of new members, the closed union seeks auto¬ 
matically to raise the wages of those already in. This works 
undoubted hardships not only upon the industry, but upon the men 
who fail of entrance to it—since they are forced into other less remuner¬ 
ative employments. 

Combined with the closed shop, the closed union would form a 
labor monopoly that could work untold harm to industry, managers 
and public, and is not for a moment to be tolerated. 

The case with the open union is, however, different. Here any 
man with the requisite ability has free access to the trade. There is 
no artificial raising of wages within the trade nor lowering of wages 
outside. The open union may therefore safely be combined with the 
closed shop, provided that we can obviate the dangers to managerial 
efficiency of which the employers have just warned us. 

4. THE STRIKE 

a) DEFINITION AND NATURE 1 

The strike may be defined as a temporary combination of wage- 
earners to effect some purpose—usually the improvement or mainte¬ 
nance of the conditions of their employment—by a concerted cessation 

1 Adapted with permission from Thomas S. Adams and Helen L. Sumner, 
Labor Problems , pp. 175-87. (The Macmillan Co., 1910.) 


UNION POLICIES AND METHODS 


613 


of work, during which active measures are taken by the strikers to 
retain the places which they have temporarily vacated. This is, 
perhaps, a rather pedantic definition of a very familiar thing. It 
serves, however, to emphasize two very essential points: (a) Strikes 
are not always declared for the laudable purpose of improving condi¬ 
tions of employment. Strikers, indeed, are often animated by the 
loftiest altruism, but sometimes they are animated chiefly by a desire 
for mere revenge or retaliation. ( b ) Secondly, the mistake must not 
be made of assuming that the strike is a mere cessation of work. 
When workmen quietly leave their employer and seek work elsewhere, 
we do not describe their action as a “ strike.” In the average or 
normal strike measures are always taken to induce competing workmen 
not to take the places vacated by the strikers. In other words an 
attempt—it may be lawful or unlawful—is made to prevent the 
employer from obtaining an adequate supply of labor. 

Strikers, however, frequently fail in preventing the employer 
from securing an adequate supply of labor, and in this event other 
forms of pressure are brought to bear upon him. When instead of, 
or in addition to, endeavoring to prevent the employe^ from securing 
an adequate amount of labor, measures are taken to deprive him of 
his customers or the materials necessary in his business, the combina¬ 
tion becomes to this extent a boycott. 

b ) THE COURSE OF STRIKES IN THE UNITED STATES 

FROM l88l TO I921 1 

The United States Bureau of Labor defined a strike as “a con¬ 
certed withdrawal from work by a part or all of the employees of an 
establishment or several establishments to enforce a demand on the 
part of employees” while a lockout was defined as “a refusal on the 
part of an employer or several employers to permit a part or all of 
the employees to continue at work, such refusal being made to enforce 
a demand on the part of employees.” During the twenty-five years 
from 1881 to 1905, strikes were twenty-five times as numerous as 
lockouts and involved ten times as many workers. Since then the 
relative proportion of lockouts to strikes has still further diminished. 
Because of the numerical insignificance of lockouts, strikes alone are 
considered in this study. 

Writing in 1905, Professor T. S. Adams, after reviewing the strike 
statistics from 1881 to 1900, declared that “ strikes are not increasing 
as rapidly as the industrial population.” From this he went on to 

1 Taken from an unpublished manuscript by Paul H. Douglas. 


614 THE worker in modern economic society 

say that . . . The trade-union makes for the regulation, not for 
the suppression of strikes, for their encouragement, in season, for their 
discouragement out of season, but on the whole its influence is con¬ 
servative.” 

The Reports of the United States Commissioner of Labor furnish a 
full record collected by field agents of all strikes and lockouts during 
the period 1881-1905. Unfortunately, our strike statistics were then 
allowed to lapse for an eight-year period, being renewed by the Bureau 
of Labor Statistics in 1914, and carried on from then to the present. 
This later material has been collected by means of press notices and 
replies to written inquiries rather than by actual field work. It is 
therefore in its very nature not as complete as that for the earlier 
years, but all its errors lie on the side of minimizing the number of 
strikes within recent years instead of exaggerating them. 

It is evident that the figures given for the recent years are under¬ 
statements of the actual conditions and hence are most conservative. 
Table LXXXVI shows, (1) the average number of strikes and strikers 
by five-year periods since 1881, 1 and (2) the relative number of both 
strikes and strikers as compared with the average during the first 
five-year period of 1881-85. 

In attempting to make allowance for the number of strikers in¬ 
volved in those strikes between 1915 and 1921 where no such report 
was made, four distinct and separate methods were used: 

Method A. —The number of strikers who were actually reported 
as having gone out on strike were alone counted. No allowance was 
made for the strikers in those strikes when the number was not 
reported. 

Method B. —The average number of strikers involved in such strikes 
was estimated as being equal to the average number in those strikes 
where the number was reported. 

Method C. —The average number of strikers in such strikes was 
estimated at 25 per cent of the average number in those strikes when 
the reports were made. 

Method D. —The average number of strikers in these strikes was 
estimated at only 10 per cent of that in those strikes when the average 
was known. 

Method A is of course a very real understatement of the number of 
men actually involved. Method B, on the other hand, is probably an 
overstatement, since those strikes when the number of strikes was not 

1 Omitting 1914, the seven years 1915-21 are treated as one period. 



UNION POLICIES AND METHODS 


6i5 


reported were probably not as large as those where full reports were 
given. Although the estimate of 25 and 10 per cent in Methods C and 
D, respectively, are somewhat arbitrary, it is believed that they are 
on the whole conservative and not far from the actual conditions. 

These statistics show that during the seven years from 1915 to 
1921 inclusive, the average number of strikes was slightly over six 
times as great as during the five years from 1881 to 1885, and between 
two and three times as great as the average number of strikes which 
occurred during the years of 1886-90. Even more notable was the 
increase in the number of strikers. Counting only those actually 

TABLE LXXXVI 


The Movement of Strikes in the United States 1881-1921* 


Period 

Average Number Per Year of 

Relative Number 
(1881-85 = 100) OF 

Strikes 

Strikers 

Strikes 

Strikers 

1881-85. 

1886-90. 

1891-95 . 

1896-1900. 

I9°i-5 . 

. 

498 

1,336 

U377 

i,35i 

2 ,793 

3,043 

124.OO? 

2 55,863 

278,868 

281,275 

406,639 

I,547,o87t 

2,395,97l! 

1 ,744, 5°2 § 
1,632,222!! 

IOO 

268 

276 

271 ~> 

56l 

6ll 

IOO 

206 

225 

227 

324 

1,248! 

i,932t 

i,4Q7§ 

1 ,3 i6 II 











* Compiled from the Twenty-first Annual Report of the United States Commissioner of Labor, 
1906, p. 15; Monthly Labor Review, II (April, 1916), 13-26; XIV (May, 1922), 181-86. Only 
strikes are included; i.e., lockouts are not included. 

f On the basis of Method A. § On the basis of Method C. 

t On the basis of Method B. || On the basis of Method D. 

reported with no allowance for workmen involved in the eight thousand 
strikes whose numbers were not reported, they totaled nearly twelve 
and a half times as many as during the first period while it is probable 
that in actuality they were somewhere between thirteen and fourteen 
times as numerous. 

Such statistics do not by themselves, however, give an adequate 
picture of the real movement of strikes. It is not until they are com¬ 
pared with the increase in the industrial population during these years 
that their real significance is disclosed. An increase in the total 
number of strikes or strikers would naturally result from a mere 
increase in the number “exposed” to strikes, i.e., industrial wage- 
earners and, hence, would not of itself indicate whether the rate 
of striking was or was not increasing. 




























6i6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The average number of industrial wage-earners during these 
periods can however be computed by following the admirable classi¬ 
fication of Professor Alvin H. Hansen, with an allowance for an even 
numerical increase during the intercensal years. 

From the foregoing data, it is possible to compute the average 
annual number of strikes and strikers per one million industrial wage- 
earners together with index numbers of their relative movement, and 
thus to reduce the strike statistics in Table LXXXVII to a common 
base. 

TABLE LXXXVII 


Relative Average Annual Strike Rates in Relation to Number of 


Industrial Wage-Earners. By Periods, 1881-1921 


Period 

Average Annual Rate Per 
1,000,000 Industrial 
Wage-earners 

Strikes 

Strikers 

1881-85. 

84 

193 

167 

170 

240 

179 

20,990 

37,050 

33,880 

29,030 

34,900 

90,846* 

140,690! 

102,44of 
95 , 840 § 

1886-90. 

1891-95. 

1896—1900. 

IQOI-5. 

1915-21 . 









Relative Rates (1881-85 = 100) 


Strikes 

Strikers 

100 

IOO 

230 

177 

199 

161 

167 

138 

286 

166 

213 

433 * 


671! 


488 f 


45 7 § 


* On the basis of Method A. % On the basis of Method C. 

f On the basis of Method B. § On the basis of Method D. 


Some very significant conclusions can be drawn from the statistics 
in Table II. The relative frequency of strikes in relation to the indus¬ 
trial population during the years 1915-21 was more than double what 
it was for the five years from 1881-85. It was however approxi¬ 
mately 8 per cent less than the rate for the years from 1886 to 1890. 
The dip in the relative frequency of strikes during the eighteen nineties 
and their rapid expansion during the first five years of the present 
century is also clearly evident from the figures. 

But more important than the number of strikes is the number of 
strikers. The proportion of the workmen who go out on strike at 
different times is the best index of whether striking is becoming more 
or less chronic in industry. The statistics on this point are even 
more impressive. Whereas during the first half of the eighties, 
approximately only one workman in forty-eight went out on strike 





























UNION POLICIES AND METHODS 


617 


each year, during the years 1915-21, at the very least, one out of 
eleven struck while probably the actual ratio was around one out of 
ten, or possibly one out of nine. In other words, the proportion of 
strikers as compared with the number of industrial wage-earners was 
from four and a third to five times as great during the seven years from 
1915 on than it was during the years 1881-85. 

But even the relative number of strikes and strikers in proportion 
to the industrial population is not sufficient in itself to indicate the 
relative tendency of strikes to interfere with the course of industry. 
For duration is just as much of a factor in the virulence of strikes as 
is their scope and frequency. Table LXXXVIII shows the average 
annual duration of strikes by periods from 1881 on. 


TABLE LXXXVIII 

Average Duration of Strikes, 1881-1921 


Period 

Average 
Duration in 
Days 

Relative Dura¬ 
tions (1881-85 = 
100) 

1881-85. 

22.7 

IOO 

1886-90. 

23-4 

103 

1891-95 . 

26.8 

118 

1896-1900. 

21-5 

95 

l 9 °I -5 . 

28.2 

124 

I 9 I 5 - 2 I. 

28.8 

127 


It thus appears from Table LXXXVIII that strikes are appreci¬ 
ably longer today than formerly and that consequently their intensity 
is greater even than is indicated by their relative numbers. 

What then is the truth of Professor Adams’ second conclusion, 
namely, that trade unions tend to decrease the number of strikes? 

By obtaining the percentage which the unionists formed of all 
industrial wage-earners and the percentage of strikes called by labor 
organizations, we can compute the relative liability of unionists to 
strikes. This relative liability is patently the relative number of 
strikes which a group of unionists (say 100,000 in number) will partici¬ 
pate in during a given period in comparison to the number of strikes 
which an equal-sized group of non-unionists will take part in. An 
illustration and a formula will more clearly explain the proper method. 
If the 10 per cent of the industrial wage earners who are unionists 
participate in 50 per cent of all the strikes while the 90 per cent who 
















6i8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


are non-unionists take part in only the remaining 50 per cent, then 
every 1 per cent of the workers who are unionists will be involved in 
5 per cent of the strikes while every 1 per cent who are not unionists 
will have taken part in only f of 1 per cent of the strikes. In propor¬ 
tion to their number, therefore, the unionists will have taken part in 
nine times as many strikes as have the non-unionists. 

« 

S 

The correct formula is L= ^ Xioo. 

N 

when:- 

L = relative liability of unionists to strikes 
S = percentage of strikes ordered by labor organizations 
U =percentage which unionists formed in industrial wage-earners 
T = percentage of strikes originating among non-unionists 
N = percentage which non-unionists formed of industrial wage- 
earners 

100 = equal liability of unionists to strikes as compared with non- 
unionists 

Table LXXXIX not only gives all the basic data, but it shows 
the relative number of strikes among the unionists in proportion to 
their numbers in comparison with the non-unionists. 

TABLE LXXXIX 

Relative Liability of Trade Unionists to Strikes 


Period 

Percentage 
of Strikes 
Ordered by 
Labor 

Organizations 

Percentage 
Which Unionists 
Formed of 
Industrial 
Wage-Earners 

Percentage 
of Strikes 
not Ordered 
by Labor 
Organizations 

Percentage 
Which Non- 
Unionists 
Formed of 
Industrial 
Wage-Earners 

Relative 
Strike-Liability 
of Union Mem¬ 
bers (100 = 
Equal Liability) 

1881-85. 

53 

5 

47 

95 

2120 

1886-90. 

63 

10 

37 

90 

1536 

1891-95 . 

67 

5 

33 

95 

3940 

1896-1900. 

62 

6 

38 

94 

2555 

1 901-5 . 

78 

15 

22 

85 

2000 

1916-21. 

86 

22 

14 

78 

2115 


It is thus apparent that in general the unionists have had approxi¬ 
mately twenty times as many strikes relative to their number as have 
the non-unionists. Once this ratio fell to fifteen, but during the next 






















UNION POLICIES AND METHODS 


619 


five years (1811-95) it increased to nearly forty. 1 The conclusion 
seems inescapable that union organization is accompanied by a tre¬ 
mendous increase in the strike rate. This statement should be not 
interpreted to mean that the unions as institutions correspondingly 
incite their members to strike. The non-unionist may want to strike 
as badly as the unionist, but he is afraid to do so because he has no 
organization to support him. The unions therefore may merely make 
possible what is in the minds of all the workers and operate, in the 
language of Bergson, not as an impelling but as a releasing cause. 

What have been the causes of strikes? During the quarter- 
century from 1881 to 1905, 33 per cent were caused by demands for 
increased wages alone and approximately 6 per cent to ward off wage 
cuts. 2 In another 26 per cent of the cases, wages were a partial cause. 
Ten per cent had as their sole cause a demand for a reduction in 
hours while this was a partial cause in 18 per cent more. Eliminating 
all double counting, 63 per cent were due either to wages or hours. 
Some 24 per cent were caused by‘demands for the recognition of the 
union—a percentage that was much higher during the years 1901-5 
than before. Only 4 per cent were sympathetic and less than 1 per 
cent were due to jurisdictional disputes, although in the earlier periods 
sympathetic strikes had been relatively much more common. During 
the period 1915-21, the percentage of strikes caused by wages and hours 
decreased slightly and there was apparently a still further decrease 
in the proportion of sympathetic strikes compared to that for the earlier 
period as a whole. 

An investigation by Professor Alvin H. Hansen suggests that dur¬ 
ing a period when the long-run trend of prices is downward (i.e. 
1881-97) that “strike movements tend to increase in periods of 
depression and to decrease in periods of prosperity.” Professor 
Hansen’s explanations of this is that during such periods labor is on 
the defensive throughout, and predominantly so during the depression 
years. When the long-time trend of prices is upward, however, as 

1 It would of course be more accurate to use the relative number of strikers 
who were unionists as the basis for comparison, but statistics upon this point, as 
differentiated between unionists and non-unionists, is very deficient for the last 
period. The relative liability of unionists would of course be higher according to 
this basis than it is by using strikes. 

2 This is defining the causes in terms of the more obvious and expressed factors. 
It is probable in any given case that a strike is called not for one reason but for 
many. 


620 


THE WORKER IN MODERN ECONOMIC SOCIETY 


from 1898 to 1919, strikes increase in periods of prosperity and 
decrease in periods of depressions. Here labor takes the aggressive 
during the boom years, to force up wages, and reduce hours par¬ 
ticularly because of the increase in the cost of living, while during 
the “bad” years, it will resort only to defensive action. 

Forty-nine per cent of the strikes initiated by the unions, during 
the twenty-five years from 1881 to 1905, succeeded, 16 per cent par¬ 
tially succeeded, and 35 per cent failed. It is interesting to note that 
the percentage of union successes was actually higher during the 
depression years 1893-97 than during the period as a whole, while 
for non-union strikes it was lower. The reports for the years 1916-21, 
while probably not as trustworthy as those for the earlier years, 
indicate that only 29 per cent of all strikes succeeded, 33 per cent were 
compromised, 33 per cent failed, and in 5 per cent the men returned 
pending arbitration. The percentage of unsuccessful strikes was 
especially high in 1921, amounting to 53 per cent. 

c) DEGREE OF LOSS OCCASIONED BY STRIKES AND LOCKOUTS 1 

In comparing the relative numbers of strikes ordered by labor 
organizations and those which have taken place among unorganized 
laborers it is worthy of note that non-union labor does not use the 
same judgment in timing its strikes to conform with favorable business 
conditions. 

Two industries, the building trades and coal mining, are the ones 
in which the strike evil is most prevalent. These two industries are 
responsible for more than one-third of all the strikes in the country. 
They have a still greater preponderance over other lines of industry 
as measured by the number of strikers and the number of employees 
thrown out of employment as a result of strikes. It will be noted 
later on in this report that there is a very clear correlation between 
the number of strikes and the seasonal or irregular character of 
employment. 

Losses in wages and production .—In its Sixteenth Annual Report, 
the United States Bureau of Labor undertook to ascertain the wage 
loss to employees and the loss suffered by employers by reason of 
strikes during the twenty-year period from 1881 to 1900. 

In commenting on these figures, the Bureau calls attention to 
the fact that many of these losses were made up later by speeding up 

1 Taken with permission from the report by C. W. Doten in Waste in 
Industry , pp. 301-14. (Federated American Engineering Societies, Washington, 
D.C., 1921.) 


UNION POLICIES AND METHODS 


621 


the work, by more regular employment, etc., so that they must not be 
regarded as net losses in the case of either the employees or the 
employers. It should be noted also that many of the strikes were 
for higher wages and were successful. In such cases it is probable that 
the wage loss to employees was soon recovered through larger earnings. 

Even taking the figures as they stand, they are not particularly 
impressive as evidence of great loss. The total loss to employees in 
twenty years was only $267,863,478 or a yearly average of $12,893,174. 
The loss to employers averages $6,136,556 a year. 

The loss to employees, if it had been borne equally by all wage- 
earners, would have imposed an average burden of only about 77 
cents a year upon each person. The per capita burden in 1900 would 
have been about 90 cents. 

King estimates the average wages in 1900 to have been $417. 
Thus the loss due to strikes in that year would have amounted to a 
little over 0.2 per cent of each working man’s wages, or in other words 
about three-fifths of a day’s time, while the yearly average for the 
whole period would have been about two-thirds of a day per capita. 
In any case it is less of a loss than an added national holiday such as 
Armistice Day would entail. Moreover it is worthy of note that 
illness occasions a loss each year at least twelve times as great, and 
that the fire loss in the country (1881-1900) was nearly ten times the 
wage loss due to strikes. 

But the above reckoning has been based upon the assumption 
that the loss set forth is an actual loss. As has already been noted 
there are numerous ways in which this loss may be compensated for 
or offset. Perhaps the most important of these is that the time 
lost in strikes is really taken out of the time that employees would 
have been idle in any case rather than out of production time. This 
is particularly true of seasonal and irregular occupations and industries 
like the building trades, clothing manufacturers, boot and shoe 
manufacturers, glass making, quarrying, and coal mining. 

Strikes in seasonal occupations .—It is significant that more than 
one-half of all the strikes that occurred between 1881 and 1905 and 
much more than one-half of the employees thrown out of work were 
in occupations or industries that are highly irregular or distinctly 
seasonal in character. Among these coal is the most conspicuous. 
It is possible to trace the effects of strikes in this industry both upon 
the employee’s working time and upon production. This is done 
in Table XC. 


622 


THE WORKER IN MODERN ECONOMIC SOCIETY 


This table indicates very little correlation between strikes and 
either the yearly output of coal or the extent of employment. Taken 
by themselves the figures representing the number of men on strike 
and working days lost per man would seem to indicate a tremendous 
waste in productive capacity and a great loss in wages; but it is 
apparent that these losses were almost entirely wiped out before the 
end of the year. 

It is noteworthy that there was more coal produced in 1910 than 
in 1911, even though the former year witnessed many protracted 
strikes involving large numbers of employees. Moreover, there was 
no real loss of employment by reason of these strikes. Again 1912, 


TABLE XC 

Strikes and Production in Coal Mines, Anthracite and 
Bituminous, in the United States, 1910 to 1916* 


Year 

Men 

Employed 

(Thousands) 

Working Days 
Lost by Reason 
of Strikes 
per Man 
Employed 

Days Worked 
per Year 

Average 
Tonnage per 
Man 
per Year 

Tons of 

Coal Produced 
(Millions) 

1910. 

725 

26.5 

220 

618 

447 

1911. 

722 

1-3 

220 

6 i 5 

443 

1912. 

723 

17-3 

226 

663 

478 

1913 . 

748 

4.1 

238 

681 

509 

1914 . 

763 

14-5 

210 

602 

459 

1915 . 

734 

3-4 

209 

645 

475 

1916. 

721 

4.6 

236 

732 

527 


* Geological Survey figures in the Statistical Abstract of the United States, 1917, pp. 259, 537. 


with an average loss per man of seventeen days, shows large total 
production, increased output per man per day and per year, and six 
days more employment per man than the previous year which was 
relatively strikeless. Low production in 1914 and 1915 was due to 
general business depression caused by the Great War rather than to 
strikes. 

It is probable that much the same results would be shown if 
statistics could be obtained in other seasonal and irregular employ¬ 
ments. It is true that all employments are subject to more or less 
irregularity, especially when individual establishments are taken into 
account. 

These statistics therefore confirm to some extent the general 
feeling among wage-earners that strikes do not in the long run mean 






















UNION POLICIES AND METHODS 


623 


much real loss of time to the men and that such loss as does occur 
is in the end more than compensated for by the purposes attained 
by means of the strike. It is probably futile, therefore, to attempt 
to convince workingmen by the citation of statistics that striking is 
inexpedient. 

Conclusion .—Such comparisons as can be made indicate that a 
very large proportion of strikes in recent years have occurred in 
seasonal and irregular occupations, such as the clothing industry, 
coal mining, and the building trades, in which employees do not 
ordinarily work much more than two-thirds of the time. Statistics, 
when properly interpreted, do not support the popular belief that 
strikes are responsible for great losses in earnings to wage-earners or 
in the output of industry. 

This may be in part due to the fact that the ordinary penalty for 
striking, namely, loss of earnings, is not effective in industries where 
workmen are normally idle about one-third of the time. Strikes in 
such occupations are probably due also to the difficulty of getting 
and keeping wage rates sufficiently above the rates in more regular 
trades and industries to enable the laborers to maintain a decent 
standard of living throughout the year. Whatever the reason or 
the cause, the remedy is to stabilize or regularize the employment. 

The strikes that have seriously affected or threatened the public 
welfare and the ongoing of industry are such strikes as those in the 
steel and coal industries in 1919, or such as have been imminent at 
times on the railroads of the country. England has been menaced 
by strikes of this sort several times since the close of the war. No 
statistical study of strikes in the past would be of any use as a means 
of showing the effects of such strikes as these, and none would be 
necessary in any case, for it is perfectly clear that they would lead to 
disastrous consequences to industry and to the general welfare which 
would be out of all proportion to the losses in wages and profits of 
those directly concerned in them. Such strikes must be prevented 
if it is possible to stop them. 

Finally, strikes are merely symptoms. Suppressing strikes will 
not cure social unrest; but will probably increase it. Strikes are 
always regrettable; but not always reprehensible. Until the social 
millennium is attained, they will continue to occur and will be some¬ 
times necessary both as a direct defense against injustice and oppres¬ 
sion and as the only way of compelling the public to give its attention 
to hidden evils in industrial relations. 


624 THE WORKER IN MODERN ECONOMIC SOCIETY 

d) LEGAL ASPECTS 1 

The legal aspects of strikes. —It has been pointed out that the normal 
strike involves a concentrated termination of employment, and system¬ 
atic persuasion with the object of keeping the strikers’ places from 
being filled, and that, in addition, pressure was frequently brought to 
bear upon the employer by depriving him of his customers or of 
the raw materials needed in his business. The discussion of this 
subject naturally turns, then, upon the right of wage-earners to 
combine (a) to quit work, ( b ) to picket, and (c) to boycott. Before 
discussing these rights, attention should be called to the general 
legal doctrine which underlies and conditions the law upon all these 
subjects: the doctrine of conspiracy. 

A conspiracy is an illegal combination. It may be more practically 
defined as a combination of two or more persons, by concerted action, 
to accomplish some unlawful, oppressive or immoral action, or to accom¬ 
plish some purpose, not in itself unlawful, oppressive or immoral, by 
unlawful, oppressive or immoral means. The reader is requested to 
notice particularly the following consequences and interpretations of 
the doctrine. ( a ) It has been interpreted very broadly, so as to con¬ 
demn combinations merely to injure public trade, to violate public 
policy or to pervert justice, (b) It follows that many actions may 
become unlawful when performed by a combination of persons, which, 
if performed by an individual, would lead neither to criminal indict¬ 
ment nor to civil action. ( c ) The combination may be punished 
though its purpose is never achieved. As was said in the celebrated 
case of Commonwealth v. Judd (2 Mass. 329), “The gist of a conspiracy 
is the unlawful confederacy to do an unlawful act .... the offence 
is complete when the confederacy is made; and any act done in pur¬ 
suance of it is no constituent part of the offence, but merely an aggrava¬ 
tion of it.” id) Finally, and most important, a combination is not 
unlawful merely because it contemplates or necessarily involves 
injury to someone. If A and B form a partnership and in the normal 
course of competitive business drive a rival C into bankruptcy, C 
has no legal redress. He has been injured but not wronged; in legal 
parlance it is damnum absque injuria. On the other hand if A and 
B combine to bankrupt C designedly, and commit acts which, while 
necessarily injurious to C, are of no direct benefit to themselves, they 
are guilty of conspiracy, and may be duly punished. 

1 Taken with permission from Thomas S. Adams and Helen L. Sumner, Labor 
Problems , pp. 187-96. (The Macmillan Co., 1910.) 


UNION POLICIES AND METHODS 


625 


The decisive factor , then , is the presence or absence of malicious 
intent. —But it is one of the unfortunate peculiarities of the strike 
that it invariably involves injury to someone—the employer, a non¬ 
union workman or a third party. The consequence is, that in almost 
every strike about whose legality there can be any question at all, 
the question finally sifts down to the legitimacy of the object of the 
strike. Was the injury involved in the accomplishment of an innocent 
and laudable purpose ? Then the strikers cannot be charged with it. 
Was there no real purpose, or only a trivial one, beyond the intent to 
injure ? Then the combination becomes a conspiracy and the con- 
pirators may be punished criminally and mulcted in damages. From 
these conditions we reach the general rule that a peaceable strike is 
illegal or legal according as the injury it entails is direct, primary and 
intentional , or secondary and incidental to the accomplishment of some 
innocent end. 

A. Combinations to terminate employment. —At the present day, a 
combination to quit work is legal or illegal according as the further 
object of the combination is good or bad. This has not always been 
the law. In England, at least, during the life of the combination acts 
which were repealed in 1824, combinations of wage-earners to effect 
even the most innocent and laudable ends were under the ban of the 
law; and the English doctrine seems to have been followed in several 
early American cases, notably that of the Boot and Shoe Makers of 
Philadelphia (1806). “A combination of workmen to raise their 
wages,” said Recorder Levy in his charge to the jury, “may be 
considered in a twofold point of view; one is to benefit themselves, 
the other is to injure those who do not join their society. The rule 
of law condemns both.” The jury found the strikers “guilty of a 
combination to raise their wages, ” and they were fined $8 each together 
with the costs of the suit. 

The American courts soon righted themselves, however, and in a 
series of cases, fully established the right of wage-earners to quit 
work for the purpose of improving the conditions of their employment. 
And this may now be accepted as the general rule. On the other hand, 
it cannot be emphasized too strongly that no such thing as a general 
right to quit work has been established. Everything depends upon 
the object for which the employees quit work. If the object be to 
increase wages, reduce hours, prevent the practice of working over 
time, or any other end which the court regards as legitimate, the 
combination is legal. But if, in the chain of intermediate means, there 


626 


THE WORKER IN MODERN ECONOMIC SOCIETY 


is an illegal act such as intimidation of a “scab,” or if the ultimate 
benefit is remote, trivial or indefinite, while the injury is the immediate 
object sought, the combination becomes illegal. 

It is not always easy to ascertain whether the intent is malicious 
or not, and in deciding difficult cases much stress is laid upon “insuffi¬ 
cient interest.” Speaking generally, people must have a plain and 
important interest at stake, or they will not be permitted to interrupt 
with impunity the business of the employer and the traffic of the public. 
The legality of three important kinds of strikes is usually determined 
by this test of sufficient interest, (a) The sympathetic strike is 
practically always illegal, the courts holding that the workmen in one 
establishment have no such interest in the success of the strike in 
another establishment, as to warrant them in involving their own 
employer and the public in the losses and discomforts of a new strike. 
(b) Strikes to secure the discharge or prevent the employment of 
non-union workmen; and ( c ) the interference of outside parties, 
usually trade union officials, in instigating and directing strikes in 
establishments in which they are not employed, have also in the past 
usually been declared illegal. The reasoning of the courts in these 
cases seems to be that the strikers or the trade union officials have 
so little to gain by the success of the strike that their actions in inflict¬ 
ing the injuries consequent upon the strike must be construed as 
predominantly malicious. In all these classes of cases a large majority 
of the decisions are adverse, but there are several strong decisions in 
the opposite direction. 

The difficult case of the strike against the employment of non¬ 
union men is discussed elsewhere. At this point the writer can only 
record his strong dissent from the doctrine that when a walking 
delegate or a union organizer goes into a factory or mine, and per¬ 
suades the employees to strike, he is necessarily without real interest, 
and guilty of malicious interference. Doubtless there are cases in 
which the object of the Walking delegate is simple blackmail. But 
in the great majority of instances his work is perfectly legitimate. 
If he be an officer of the union to which these employees belong, 
he is merely doing what he is elected or appointed to do, namely, 
watch out to discover when they can better their conditions and direct 
them in the method of betterment. He is no more guilty of malicious 
interference than is the counsel of a great company when he advises 
the directorate to reduce expenses by introducing labor-saving 
machinery or a cheaper grade of labor. On the other hand, if he be 


UNION POLICIES AND METHODS 


627 


an organizer, engaged in persuading non-union employees to enter the 
union and demand union terms, he has an even more vital interest at 
stake. The trade union which has secured the higher rate must induce 
the non-union competitors to demand the same terms, or itself be 
forced back to the lower level. The union official who persuades non¬ 
union men to demand union terms, is, in his own belief, inducing them 
not only to better their own condition, but to cease injuring the trade 
unionists whom he represents. In the last analysis the decision of the 
court in these delicate questions of intent and interest will be decided 
by the political economy of the court. If the judge believes that the 
working man cannot substantially improve his condition without 
making positive efforts to improve it, then he should acquiesce 
in the methods of combination and union which up to the present time 
have been the most efficient instruments which the laboring classes 
have devised to improve their condition. 

a) Statute law on strikes .—Up to this point we have been speaking 
as if there were no statute law on strikes, but this is not strictly true; 
about fifteen states have statutes modifying the old law of conspiracy, 
specifically conferring on the laborer the right to combine to raise 
wages, or to induce by peaceable means, any person to accept or quit 
any employment. But with these exceptions the statutes do not 
appear substantially to have altered the common law. 

Three federal statutes, however, are of great importance: section 
3,995 of the Revised Statutes which penalizes the knowing and wilful 
obstruction of the passage of the mails; the tenth section of the 
Interstate Commerce Act which makes it a misdemeanor to interfere 
with interstate transportation; and the first section of the Anti-Trust 
Act of 1890 which declares illegal every combination in restraint of 
trade or commerce among the several states or with foreign nations. 

No one can state at the present time the exact effect of these 
statutes upon the legality of labor combinations. 

B. Picketing .—The second fundamental question involved in the 
strike concerns the right of strikers to persuade other workmen not 
to accept employment with the employer involved. This is usually 
accomplished by pickets or patrols who are stationed about the works 
of the employer in order to intercept “strike breakers” and persuade 
them not to take the places vacated by the strikers. 

The law upon picketing can be stated in a few words. The theo¬ 
retical right of strikers peaceably to persuade competing workmen not 
to take their places has been fully established. Nevertheless the 


628 


THE WORKER IN MODERN ECONOMIC SOCIETY 


American cases in which actual picketing has been sanctioned or 
permitted can be numbered, so to speak, on the fingers of one hand. 
The explanation of this apparent anomaly is not far to seek. The 
strike-breaker or “blackleg” is seldom willing to discuss the proprieties 
of his action with the strikers, or entertain toward them any other 
feelings than those of the liveliest fear and apprehension. • To per¬ 
suade him you must detain him against his will, and to detain him by 
force constitutes coercion or intimidation. And this goes far to explain 
why almost every decision on the subject affirms the abstract right 
and condemns the actual practice of picketing. 

e) A COURT DECISION ON THE RECIPROCAL NATURE OE EMPLOYER’S 
AND EMPLOYEE’S RIGHTS IN STRIKES AND LOCKOUTS 1 

The defendants acted within their right when they went out on 
a strike. Whether with good cause, or without any cause or reason, 
they had the right to quit work, and their reasons for quitting work 
were reasons they need not give to anyone. And that they all went 
out in a body, by agreement or preconcerted arrangement, does not 
militate against them or affect this case in any way. 

Such rights are reciprocal, with or without cause, and it cannot 
be inquired into as to what the cause was. 

When the defendants went on a strike, or when put out on a 
lockout, their relations with the company were at an end: they were 
no. longer employees of the company; and the places they once oc¬ 
cupied in the shops were no longer their places, and never can be again, 
excepting by mutual agreement between the defendants and the com¬ 
pany. 

The company has the right to employ others to take the places 
once filled by defendants; and in employing others the defendants 
are not to be consulted, and it is of no lawful concern to them, and they 
can make no lawful complaint by reason thereof. And it makes no 
difference whether such new employees are citizens of Omaha or of 
some other city or state. 

Defendants have- the right to argue or discuss with the new 
employees the question whether the new employees should work for 
the company. They have the right to persuade them if they can. 
But in presenting the matter, they have no right to use force or 
violence. They have no right to terrorize or intimidate the new 
employees. The new employees have the right to come and go as 

1 Adapted from the opinion of the court in Union Pacific Railway Co. v. Ruef, 
120 Fed. 102 (1903). 


UNION POLICIES AND METHODS 


629 


they please, without fear or molestation, and without being compelled 
to discuss this or any other question, and without being guarded 
or picketed, and persistent and continued and objectionable persuasion 
by numbers is of itself intimidating, and not allowable. 

Picketing in proximity to the shops or elsewhere on the streets 
of the city, if in fact it annoys or intimidates the new employees, 
is not allowable. The streets are for public use, and the new employee 
has the same right, neither more nor less, to go back and forth, freely 
and without molestation and without being harassed by so-called 
arguments, and without being picketed, as has a defendant or other 
person. In short, the rights of all parties are one and the same. 

/) THE BATTLE-LINE OF ORGANIZATION AND OF STRIKES 

i. The Mine Guard System in West Virginia 1 

The Senate Committee on Labor and Education had been 
instructed two months before to “make a thorough and complete 
investigation” of the year-old West Virginia struggle. After the 
miners’ march Chairman Kenyon and another member looked into 
the mining towns and the committee held hearings in Washington, 
skimpily reported in the press. A good many pages of testimony 
deal with the mine guards; especially with witness Lively, the Baldwin- 
Felts detective, experienced strike-breaker in Colorado, member of 
the union in West Virginia, officer in it and convention delegate, in 
the open with a smoking gun when Hatfield and Chambers were shot, 
and all the while drawing $225 a month as a spy. 

Senator McKellar: Do you mean to say that you were vice-president 
of the local lodge of the union while you were acting in the employ of the 
detective agency ? 

Lively: Yes, sir. 

Mr. Avis (for the operators): He has that right. That is the method 
practiced by the Department of Justice. 

Senator McKellar: I certainly hope that it is not practiced by the 
Department of Justice. I would feel much more against the Department 
of Justice. 

Mr. Avis: I think that is practiced by every department at 
Washington. 

Senator McKellar: I will say that it violates every idea of right that 
I ever had. I never would have believed that a thing like this would 
happen, and I am not surprised that you are having trouble down there in 
Mingo County. 

Well, two-and-two have made four for a good many years. 

1 Adapted with permission from an article by Heber Blankenhorn in the New 
Republic , February 15, 1922, pp. 333-34* 


630 THE WORKER IN MODERN ECONOMIC SOCIETY 


Senator Kenyon’s report states: 

The system of paying deputy sheriffs out of funds contributed by the 
operators, is a vicious and un-American policy and a practice that should 


cease.It is rather freely admitted that the purpose of this plan is to 

prevent men from coming into the county to organize the United Mine 
Workers. Men have been driven out of the county who attempted to do 
so.Undoubtedly this system has helped to bring about some of the 


friction that has been created. We do not hesitate to denounce this practice 
as contrary to the genius and spirit of our institutions and to urge that it 

be discontinued.There is complete industrial autocracy in Logan 

county. Members of the United Mine Workers of America are driven 
out of the county by force, if necessary. The operators of that county 
contributed in 1920 $46,630 to the payment of deputy sheriffs. The year 
1921 it was $61,517. These deputy sheriffs acted as general deputy sheriffs, 
serving processes around the county and arresting men who had no connec¬ 
tion with the operators’ companies.It is amazing that anyone 

would seek to defend such a condition. 

ii. Violence in the West Virginia Strike of 1913 1 

Senator Martine of New Jersey, a member of the investigating 
commission, is quoted as saying: “Then we heard stories, not from 
one witness, but from a hundred, of how gatling guns were loaded 
upon flat cars and freight cars and these trains were run at night 
through the mining villages where the strikers were with their families. 
These trains would run up to a village, usually a single street along 
the railroad track, the mine guards would fire a couple of rifle shots 
from the cars to incite the strikers to return the fire, and then the 
machine guns would be brought into action and the train would move 
the length of the village at a snail’s pace, spitting bullets at the rate 
of 250 a minute, perforating the tents and shacks and mowing down 
and maiming and killing men and women and defenseless children.” 

Hi. The Colorado Strike of 1914 2 

On April 20 militiamen destroyed the Ludlow tent colony, killing 
five men and one boy with rifle and machine gun fire and firing the 
tents with a torch. Eleven children and two women of the colony 
who had taken refuge in a hole under one of the tents were burned to 
death or suffocated after the tents had been fired. Accounts vary as 

1 Taken with permission from Harry W. Laidler, Boycotts and Labor Struggle, 
p. 299. (John Lane Co., 1914.) 

3 Adapted from George P. West, Report on Colorado Strike, pp. 126-27. (Fed¬ 
eral Commission on Industrial Relations. Published by Barnard & Miller, 1915). 


* 


I 





UNION POLICIES AND METHODS 


631 


to who fired the first shot, but it is established that the first offensive 
movement was the planting by the militia of a machine gun on a hill 
in full view of the strikers and the exploding of two dynamite bombs 
by the militia as a signal to call the militia and mine-guards from 
nearby mines and camps. The strikers did not know the purpose 
of these bombs and they streamed out of the colony while about 
sixty of them with guns took up a position in a railroad cut. 

iv. The Use of Spies and “ Under-Cover ” Men 1 

Mr. Sidney Howard in 1920 conducted under the direction of 
Dr. Richard Cabot, professor of Social Ethics at Harvard, a rather 
startling research into the extent of the spy business. His report 
finds the spy business national in scope and lucrative; that one of the 
agencies was paid an annual retainer of $125,000 by a single client 
(until the client, a well-known clothing manufacturer, discontinued 
it for an agreement with a labor union); and that one of the agencies 
paid an income tax for 1918 of $258,000. 

Conditions have not changed except for the worse since nearly ten 
years ago when the Federal Commission on Industrial Relations recom¬ 
mended action against the so-called detective agencies. One of these 
agencies declared at that time that they could put 10,000 armed men 
into the field inside of seventy-two hours. 

In January, 1921, ten high labor officials in Akron, Ohio, including 
men who had been president or treasurer of the city’s Central Labor 
Union, or had been candidates for city council in municipal elections, 
were revealed as on the pay-roll of the Corporation Auxiliaries, 
Cleveland office, disclosed by signed confessions from some men 
obtained, particularly by the machinists’ union. 

v. The Use of Violence by the Workers 2 

It is not the mere act of striking that produces violence. The 
violence begins when the employers attempt to resume work with 
non-union employes. If a trade is almost perfectly organized, the 
employers seldom attempt to resume operations, hence there can 
be no violence, because there is no occasion for it. Hence there is 

1 Adapted with permission from Public Opinion and the Steel Strike , by the 
Commission of Inquiry of the Interchurch World Movement, pp. 3-4. (Harcourt, 
Brace & Howe, 1920.) 

a Adapted from Luke Grant, “The National Erectors’ Association and the 
International Structural Iron-Workers, A Report to the Federal Commission on 
Industrial Relations,” pp. 114-37- (Barnard & Miller, 1915.) 


632 


THE WORKER IN MODERN ECONOMIC SOCIETY 


less violence in the more strongly organized trades than in the less 
organized industries. 

In recent years there has been a marked change in the nature of 
the violence committed in the building trades and in the methods used. 
The ordinary workman who in former days was apt to use his fists 
on the head of a “scab” for the sake of “the cause,” seldom does so 
now. His place has been taken by the professional thug and gunman. 
Violence has become commercialized and made more brutal. Assaults 
on non-union workmen are seldom made openly as in former days when 
the strikers did the assaulting. The professional slugger lies in wait 
for his victim, assaults him with a bludgeon or shoots him to death. 
There are several reasons for this change. Employers have been able 
to give publicity to acts of lawlessness and arouse public sentiment. 
They have stirred up public officials. They have invoked the aid of 
the courts. These repressive measures have made open assults on 
non-union workmen by crowds of strikers dangerous in large cities. 
So the professional slugger has been developed. 

That such a system of organized thuggery obtains in many of the 
building trades unions is beyond dispute. The rank and file of the 
unions do not know anything about it, for obvious reasons. The 
agent who has the “work” done is himself frequently in ignorance of 
the identity of the actual perpetrators. That being the case, it would 
be absurd to suppose that the rank and file of the union know. 

“ Do you approve of violence in labor disputes ? ” was the question 
put to an old member of a building trades union in Chicago, who has 
been active in union affairs for a quarter of a century. 

“Did we ever get anything in the early days without violence?” 
he asked in reply. “But,” he added, “I don’t believe in the profes¬ 
sional sluggers who are employed today. A bunch of murdering, 
blackmailing crooks. I wouldn’t have them around me and I protest 
every time an appropriation is made for ‘ organizing purposes.’ 

“Punch a scab? Why that is all right. I have done that and 
we never thought of pay for it. Of course it isn’t so necessary today 
with the perfect organization we have, but there isn’t the same spirit 
in the boys now. We used to go out and clean up a job and the union 
didn’t even allow us carfare. Now the professional bums and 
blackmailers wouldn’t cross the street to hit a scab unless they are 
assured of their pay. I don’t believe in that kind of violence.” 

Many statements are made that labor unions do not believe in 
violence. If the statements mean that the average union man 


UNION POLICIES AND METHODS 


633 


would not himself commit violence, they are true. If they mean that 
the average union man in the building trades does' not approve of 
violence, if it brings the results sought, then the statements are not 
true. The average building trades mechanic is interested in results 
and he is not apt to inquire closely into the methods used, if the results 
are attained. The fact that he has no personal knowledge of acts of 
violence relieves his mind of responsibility. 

If he hears or reads, however, of a building that is being erected 
by non-union men in his particular craft having been destroyed by 
dynamite and that the employer as a result has decided to employ 
union men, he does not feel overwhelmed with grief over the outrage. 
If he attends a meeting of his union and hears a veiled report that an 
“accident” happened on a certain job the other day and that the 
employer has since signed an agreement with the union, he will nudge 
his companion and whisper “good work.” He may add, “Of course, 
I don’t believe in that sort of thing, but it seems to bring results.” 
And his companion will reply that the business agent is “all right” 
and both will vote for his re-election. 

As a rule in labor disputes where there is a resort to the destruction 
of property, it comes only after other methods to obtain the desired 
results have failed. The first form of violence comes in the shape of 
attacks on those who take the places vacated by the strikers. When 
that proves ineffective, when the strikers find they cannot prevent 
the work being done, the next step is to seek to destroy that work. 

The underlying motive is the firm conviction in the minds of the 
strikers that the particular work belongs to them. They may have 
refused to perform that work except under conditions acceptable to 
them. These conditions may not be acceptable to the employer. 
Still the workers cannot in their minds separate themselves from their 
jobs and they feel justified in wreaking vengeance both on those who 
took their places and on the employer who permitted and encouraged it. 

With the structural ironworkers, assaults on non-union men 
marked the beginning of the fight against the open shop. As has been 
said these assaults were numerous and vicious, but proved wholly 
ineffective. The number of non-union jobs increased, while the 
chances of employment of union men decreased. If the non-union 
men could not be frightened or intimidated because of the assaults, 
other methods had to be tried. Assaults on non-union men did not 
hurt the employer, physically or financially, but if the work was 
destroyed it might touch him in a vulnerable spot. 


634 THE WORKER IN MODERN ECONOMIC SOCIETY 


That is the way the ironworker looked at it. The fact that it 
was unlawful to destroy property would give him little concern. 
According to his code of ethics, the “snakes” had no right to take his 
work. They didn’t contribute to the support of the union. They 
were willing to accept the good wages and conditions which the union 
had brought about without helping to support it. They were enemies 
of society in general and of the union ironworkers in particular. 
They were attempting to break down and destroy certain standards 
which the union had established. Therefore any means to force 
them off that work, or into the union, were justifiable, as the union 
ironworker looked at it. 

That the employer had a right to employ non-union men if he chose 
to do so, would not strike the union ironworker forcibly. He is not 
concerned about nice points about law or ethics. That the hated 
“snake” had a right to work; that he probably had a family to 
support; that he was not violating any law by working, would not 
appeal to the union man. The latter lives daily in a union atmosphere. 
He does not hear the rights of the employer, or of the non-union man 
discussed. Only the rights of the union man, or the wrongs, real or 
fancied, which he has to endure, are topics of conversation in union 
halls. 

The union man feels that he should be a preferred customer and 
have first choice in the matter of obtaining work. If that work must 
be obtained at the expense of the non-union man, that does not make 
any difference. It is for that the union man is paying dues. The 
aim of the union is to have a monopoly of work in a particular trade. 
It differs from an oppressive monopoly in that any competent workman 
may join the union and share in the benefits. 

By way of illustration, suppose that an open shop firm secures a 
contract for the erection of a large building or bridge in or near a city 
where the structural ironworkers are organized. Union men out of 
work daily see the open shop men at work. They complain to their 
business agent and at their union meetings. They declare they cannot 
find jobs while “snakes” are steadily employed right under their noses. 
They demand to know what they are paying dues for. The business 
agent realizes that a storm is brewing and he must do something. 

One night the bridge or building is wrecked by dynamite. Next 
day the contractor decides to make a contract with the union. The 
idle men are given jobs. At the next meeting of the union the business 
agent may report that the job in question has been “straightened 
out” and as a result all the idle members have found employment. 


UNION POLICIES AND METHODS 


6 35 


Is it reasonable to suppose that the members of the union do not 
understand why the job was “straightened out?” Is it natural to 
suppose that they will demand to know of their business agent if 
he was responsible for the explosion ? They wanted to get that work 
and they got it. They do not know, of course, who caused the 
explosion. They do not care to inquire. It brought results and that 
was what they were looking for. 

Do they believe in violence? They didn’t destroy the property 
and they don’t know who did. They probably adopt resolutions 
denouncing the unknown perpetrators and offering a reward for their 
arrest and conviction. The Western Federation of Miners in conven¬ 
tion offered a reward for the arrest of the men who blew up the 
Independence depot in June, 1904, killing fourteen men. Harry 
Orchard afterward confessed that he and Steve Adams did it, acting 
as agents for the officers of the union. 

In this way do union men collectively approve of violence that few, 
if any of them, would individually commit. As a matter of principle 
they believe that violence is wrong. But principle in the abstract 
has less weight in their minds than the immediate and concrete 
necessity of finding work. 

Either the non-union men are assaulted or an attempt is made to 
destroy the work. The structural iron workers tried both the assault¬ 
ing of non-union men and the destruction of property and the latter 
seemed most effective and less dangerous. In the beginning of the 
trouble, when slugging of non-union men was the rule, the arrests 
were numerous and many convictions were obtained. The dynamiters 
carried on their work of destruction for five years before they were 
caught. 

vi. Violence and Picketing 1 

In order that they may get the jobs, it is necessary to prevent 
others from taking them. They cannot go to the employer and ask 
him not to fill their old positions. He has already made himself per¬ 
fectly clear on that point. 

What is the natural thing for the strikers to do ? Prevent new 
employees from taking the jobs in that factory, of course. If that can 
be done by peaceful methods, so much the better. If it cannot, then 
it must be done by violent methods. The important thing is that it 

1 Adapted from Luke Grant, The National Erectors' Association and the Inter¬ 
national Structural Iron Workers. A Report to the Federal Commission on Indus¬ 
trial Relations, p. no. (Barnard & Miller, Publishers, 1915.) 


636 THE WORKER IN MODERN ECONOMIC SOCIETY 


be done. That is the way the workers view the situation, the law 
to the contrary notwithstanding. 

The factory is picketed. The courts have held that “peaceful 
picketing” is not unlawful. It may be lawful, but it is entirely useless 
and ineffective. It is not necessary for the courts to restrain “ peaceful 
picketing” although they sometimes have done it. The only purpose 
in picketing a factory is to prevent certain workers taking the places 
vacated by certain other workers. The theory of “peaceful picketing” 
is that the workers seeking employment in that particular factory 
will voluntarily turn away when they are told that a strike or lockout 
is in progress. 

In actual practice they do nothing of the kind, or only in rare 
instances. The pickets know that; so do the employers. It is not 
necessary that the pickets actually assault the employees who desire 
to enter the factory. If the pickets assemble in sufficient numbers, 
it is possible to intimidate those seeking employment, without actually 
assaulting them. But it is the fear of possible assault that brings 
results; not moral suasion. The “moral suasion” argument is good 
in the courtroom or on the public platform, but around the factory 
it counts for practically nothing. Everyone with practical experience 
of conditions knows that. 

PROBLEMS 

1. What is collective bargaining? How does it differ from individual 
bargaining ? Does the employer bargain collectively ? 

2. Compare in detail the relative bargaining power of workmen and 
employers as regards (a) knowledge, ( b ) alternatives, ( c ) loss, if the bar¬ 
gain is not agreed upon. What effect does this have upon wages and 
why ? 

3. If the marginal productivity theory of wages be true, what need is there 
for the organization of workers ? 

4. How does the collective bargain enable the worker to secure better 
terms ? 

5. “I will meet with committees of my men to discuss wages and working 
conditions but I will not meet with any outsider or walking agent.” 
Do you in general agree or disagree with this statement? Why or 
why not ? Why have business agents arisen ? Do they perform any 
economic function for the workmen and if so, what ? 

6. “ Not only should the workmen have the right of contracting collectively, 
but they should also have the right of being represented by whomsoever 
they wish. The denial of the right of representation is tyranny. With¬ 
out the right to choose their representative, the men cannot enjoy the 
full benefit of collective bargaining.” Do you agree? Why or why 
not ? 


UNION POLICIES AND METHODS 637 

7. Is collective bargaining the only reason for the existence of unions? 
Name five other reasons why workmen form unions. 

8. Is the American Medical Association a trade union ? Is the American 
Bar Association, the National Education Association, the Association 
of University Professors ? Just what is a trade union anyhow ? 

9. Does collective bargaining exist when there is a tacit agreement upon 
the part of labor not to accept less than a given wage; when the workers 
draw up a wage scale and submit it to the employers ? 

10. What matters ordinarily come within the scope of collective bargaining ? 
Trade agreements are often signed stating that the agreement shall 
cover “conditions of labor.” What is included under this phrase? 

11. Are the following at present the subject of collective bargaining: 
(a) selection and discharge of foremen, ( b ) methods of trade training, 
( c ) installation of new processes ? Under what conditions might they 
become the subject of collective bargaining? 

12. Does the union rate of wages mean that no workers can receive more? 
Do unions in practice tend to make wages within a trade more uniform ? 
Why or why not ? Do you believe they should be more uniform ? 

13. Should a trade union prohibit its members from working for less than 
the union rate ? Shouldn’t individuals be allowed to work for a lower 
wage if they wish to ? Should the unions try to prevent non-members 
from working for less than their rate if these other men wish to do so ? 

14. Why should the unions try to fix the length of a standard day’s work ? 
Are there not innumerable instances when, due to unexpected con¬ 
tingencies, men should work more than the given number of hours? 
Should not the workmen be allowed to exceed the normal length of the 
working day in such emergencies ? 

15. “It is necessary not only to make an original agreement concerning 
wages, hours and working conditions but it is necessary that there should 
be some agency to interpret these agreements and to administer them.” 
How are such agreements typically interpreted and administered now ? 
What difficulties arise in this process? The men’s clothing industry 
in Chicago, Rochester, New York, and Baltimore have trade boards 
and arbitration boards with neutral chairmen which pass upon questions 
arising under the agreement. What do you think of these methods in 
comparison with the common procedure ? 

16. As a result of many strikes many employers have granted the specific 
demands of their employees as regards wages, hours, etc., but have 
refused to recognize the union. Why should the workmen want to have 
the union recognized if they gain their specific demands ? 

17. What is the “closed shop,” the “open shop,” the “closed union,” the 
“open union” ? 

18. “There is no such thing as an open shop. There are only two varieties 
of the closed shop.” What is meant by this statement ? Do you believe 
it to be true ? Why or why not ? 


638 THE WORKER IN MODERN ECONOMIC SOCIETY 


19. Why do many unions demand the closed shop ? The Railway Brother¬ 
hoods on the other hand do not demand it. How do you account for 
their attitude ? 

20. Is it right for the unions to deprive the non-union man of an opportunity 
to work ? To what extent do they deprive him of his right to work ? 

21. “To permit the non-union man to work in a union shop would be to 
permit him to reap where he had not sown and would pave the way for 
the breakdown of the union.” What reasons could be given in support 
of this statement ? What does the non-union man reap ? What was it 
that had been sown ? Would the non-union man disrupt the unions ? 

22. The position of the non-union man has been declared to be analogous 
to those who refuse to assume military service in that both accept the 
privileges of protection but refuse to assume any of the necessary 
responsibilities. In what ways, if any, is there a real analogy and in 
what ways, if any, does the analogy break down ? 

23. “The closed shop means that the number of workmen in that trade will 
be limited and that a monopoly wage is thereby secured while wages in 
other trades are lowered.” Is this the case with the closed shop and 
the closed union, the closed shop and the open union ? 

24. What is a strike, a sympathetic strike, a general strike, a lockout, picket¬ 
ing? Is the strike a method of violence? Why are lockouts less fre¬ 
quent than strikes ? 

25. Every strike involves three parties: workmen, employers, and the public. 
Who are the public? How are they affected? Compare the degree 
to which they would be affected by a machinist’s strike, a railroad strike, 
a newspaper strike, a policemen’s strike, a hatmakers’ strike, and a 
miners’ strike.. 

26. “Most strikes are won or lost in the first two weeks.” Comment. 

27. “The public is inclined to oppose any strike since the workmen are gen¬ 
erally in the role of aggressors. As a matter of fact, the workmen are 
frequently forced to take apparently the aggressive whereas in reality 
they are on the defensive.” What does this statement mean ? Can 
you give any illustrations of its truth or untruth ? What bearing does 
it have upon the standards of judging whether a strike is justified or 
not ? 

28. How great is the loss to workmen because of strikes ? It is frequently 
stated that a strike does not mean an increase in the amount of time 
lost by the workers but merely a transferral of inevitable unemployment 
from one period to another. Do you agree with this and why ? Give 
illustrations to support your belief. 

29. Do trades unions increase the number of strikes; the number of suc¬ 
cessful strikes ? Why or why not ? 

30. What is meant by “malice” ? How do the courts use the word? 


UNION POLICIES AND METHODS 639 

31. Are not strikes maliciously designed to injure the employer and should 
they not therefore be prohibited by law ? 

32. Have strikes increased or decreased during the last forty years; has 
the number of strikers ? How do you account for the movement ? 

33. What attitude do the courts generally assume toward strikes to enforce 
a closed shop; sympathetic strikes, strikes against non-union material, 
and why ? Do you agree or disagree with this general policy in these 
matters and why ? 

34. What is picketing ? Would you regard the following as legal and proper 
forms of picketing; circulating handbills; asking non-striking workmen 
to leave their positions; request by one picket that workmen leave; 
by two workmen; by ten; by a hundred; shouting “scab” at workmen; 
forming a lane through which workmen must pass; throwing rocks, 
rotten missiles; bodily assault? Defend your opinion in each case. 

35. Should the courts give damages to an employer against striking union 
workmen because they persuaded men to leave whom he had employed 
to take their places, and hence interfered with his production and 
damaged his business ? 


CHAPTER XXI 

UNION POLICIES AND METHODS —Continued 
i. THE UNION LABEL 1 

The trade-union label, using the term in its widest sense, is used 
in three forms: (a) a label to mark a product, ( b ) a shop card for 
display in a place of business, and (c) a button for personal use. 

Whether or not a trade union can establish a demand for goods 
bearing its label depends upon a variety of factors: (i) on whether 
the goods are bought by unionists or by other classes in the commu¬ 
nity; (2) on whether the goods are ordinarily purchased by men or 
women; (3) on whether the goods are of such a character or are 
purchased under such circumstances as to make it possible for other 
unionists to know whether the unionist purchasing the goods is 
buying union or non-union goods, and (4) on whether the purchase 
is one frequently repeated or only one made at considerable intervals. 
The influence of these factors will be considered in this order. 

1. As has already been noted, the unions have for some years 
almost entirely abandoned the attempt to promote the demand for 
label goods among those sections of the purchasing public not closely 
identified by sympathy with the unions. 

The general rule that label goods are demanded chiefly by unionists 
is strikingly illustrated by the differences in the demand for such goods 
in different sections of the country. Where large manufacturing or 
mining interests absorb a large part of the attention of the population 
and the workers are well organized, as in the coal fields of Pennsylvania 
and the Middle West, in the mines of the Western States, or in the 
manufacturing towns of the Middle West, the demand for label goods is 
more than proportionately strong. The aggregation of large numbers 
of unionists produces an intensity of pro-union feeling which con¬ 
tributes greatly to the sale of label goods. For the same reason there 
is no considerable demand for the label on the more expensive grades 
of goods. Cigars selling at over ten cents rarely have the label. 
The majority of hats having the label are of middle quality. The 

1 Adapted with permission from E. R. Spedden, The Trade Union Label , pp. 
16 ff. (Johns Hopkins Press, 1910.) 


640 


UNION POLICIES AND METHODS 


641 


best grades of hats, even though made in union factories, do not carry 
the label, for purchasers of hats at five dollars and over would be more 
likely to be repelled than attracted by the label. 

2. It is of prime importance, if the demand for the label goods of a 
union is to be strong, that the purchase of the particular goods should 
be made by the men and not the women of the family. It would be 
difficult to name a single article ordinarily purchased by women in 
which there is a strong demand for label goods. 

3. A very large part of the demand for label goods depends upon 
the pressure of union opinion. Many trade unionists buy label goods 
not because they believe in the label as an instrument for advancing 
the interests of the wage earners, but because they fear the reprobation 
of their fellow unionists if they do not do so. One element of strength 
in the Cigar Makers’ and Brewery Workers’ labels lies in the fact that 
a certain publicity ordinarily attends the purchase of cigars or beer. 
It is a matter of frequent complaint among the Cigar Makers however 
that although unionists when in groups almost always buy union-made 
cigars, they are not so careful when they are alone and in places 
where the character of their purchases is not likely to be noted. It 
is one of the elements of weakness in the demand for the Cigar Makers’ 
label that the label is not and cannot very well be imprinted or pasted 
on the cigar. A trade unionist having purchased a cigar or several 
cigars of non-union make does not fear detection by his fellow unionists. 
It is only at the time of purchase that pressure can be exerted. On 
the contrary, articles of wearing apparel such as hats, shoes, and 
garments have labels durably placed on them, and if a unionist has 
purchased a hat without the label some untoward chance may at 
any time reveal the fact to his fellow unionists. 

4. A final factor in the demand for the label and one of great 
importance is whether the purchase is one made frequently or at 
considerable intervals. The purchase of cigars, hats, shoes or gar¬ 
ments is a recurring act, while the purchase of many other goods used 
by unionists is only infrequently made, perhaps once or twice in a 
lifetime. In the former case the unionist learns to associate the label 
with the particular commodity, and successive purchases strengthen 
the habit of asking for goods bearing the label of a particular union. 
In the case of articles purchased only at long intervals, as for instance 
a kitchen range, the unionist has probably not had his attention 
drawn to the fact that there is a label on such goods. 


642 


THE WORKER IN MODERN ECONOMIC SOCIETY 


2. THE BOYCOTT 

a) BEGINNINGS OF THE BOYCOTT IN AMERICA 1 

In the strike, the worker uses his power of persuasion or coercion, 
only in his position as producer. The unionists of the eighties in the 
United States found that in many instances a threat to strike failed 
greatly to disturb the employer. The workers therefore came to 
realize that they had utterly neglected to use their power as consumers. 
“Let us tell the unfair employer that he may fill our places with other 
workmen, but that he will be unable to sell the goods his new employees 
produced.” 

Along such lines were they beginning to reason in the early 
eighties, about the time that the word “boycott,” accompanied with 
tales of the effective ostracism of the English landlord class, was 
borne in upon them. It was a period in America of widespread labor 
troubles, waged for the most part by the then prosperous Knights of 
Labor, an organization especially adapted to appeal effectively to 
large masses of friendly consumers. The weapon was naturally 
seized upon with vigor. 

In the words of the New York Bureau of Statistics of Labor: 

If a body of workmen feel that a strike is the only way of enforcing 
their claims, they will try to make that strike valid, and to bring it to a crisis 
by adopting any other legal method which will further embarrass the 
employer. The strike is negation. The boycott is action. It is simply 
a question of logical sequence. If the employer can dismiss his dissatisfied 
work people and replace them, the burden falls on the shoulders of labor, alone. 
If, on the other hand, the workman resorts to boycott, he intercepts the employer's 
profit. Boycotting possesses this one merit over striking—it is less costly. 
In some instances the men return to work and, as far as surface indications 
go, the war with the firm is at an end. Not so with the boycott. Its work 
is quietly but persistently directed against the sale of the goods of the 
firm. The union itself is put to little expense. Beyond printing and 
distributing the boycotting circulars and sending committees to visit sister 
organizations, the outlay is very small. If it is an article which enters 
into daily consumption and is of such a character that it can be made the 
subject of ordinary conversation, it will soon force the employer to expend 
money in advertising it, in order to counteract the silent influence of the 
boycott. 

1 Taken with permission from H. W. Laidler, Boycotts and the Labor Struggle, 
pp. 56-59. (John Lane Co., 1914.) 


UNION POLICIES AND METHODS 


643 


b) DEFINITIONS AND CLASSIFICATION OF BOYCOTTS 1 

A boycott in labor disputes may be defined as a combination of 
workmen to cease all dealings with another, an employer or, at times, 
a fellow worker, and, usually, also to induce or coerce third parties 
to cease such dealings, the purpose being to persuade or force such 
others to comply with some demand or to punish him for non- 
compliance in the past. 

Boycotts may be divided into negative and positive boycotts. 
The primary purpose of negative boycotts is to secure for “fair” 
firms the patronage of labor and its friends. Indirectly, they divert 
trade from “unfair” employers. In the prosecution of this form of 
boycotts, a union label is usually placed on goods as a guarantee to 
the trade unionists and to the public generally that the goods are 
produced under conditions favorable to the unions. “White” or 
“fair” lists which announce to the public those who have complied 
with trade union conditions are also printed and distributed. 

The positive boycott generally takes the form of the “ unfair ” or 
the 11 We don’t patronize ” list and the boycott proper . 

The unfair list is a list of those firms which, from the standpoint 
of the trade unionists, are unfair to labor. The list is published for 
the most part in trade union periodicals, or posted at trade union 
headquarters. Publication in the papers of one trade often leads 
through “ courtesy ” to publication in other trade journals. Unionists 
are supposed to cease all dealings with those whose names thus appear. 
Since February, 1908, following the Danbury Hatters and Buck’s Stove 
decisions, the “We don’t patronize” list has been of little importance. 

The boycott proper may be divided into the primary, the secondary 
and the compound boycott. A primary boycott may be defined as a 
simple combination of persons to suspend dealings with a party 
obnoxious to them, involving no attempt to persuade or coerce third 
parties to suspend dealings also. Thus, if workmen in one industry 
go on a strike against a firm and agree to refuse to purchase any product 
from that firm, without endeavoring to persuade others to do likewise, 
a primary boycott will be the result. This form, however, is rarely 
used in labor disputes as it is comparatively ineffective. 

A secondary boycott may be defined as a combination of workmen 
to induce or persuade third parties to cease business relations with 

1 Taken with permission from H. W. Laidler, Boycotts and the Labor Struggle , 
pp. 60-68. (John Lane Co., 1914O 


644 


THE WORKER IN MODERN ECONOMIC SOCIETY 


those against whom there is a grievance. A compound boycott appears 
when the workmen use coercive and intimidating measures, as dis¬ 
tinguished from mere persuasive measures in preventing third parties 
from dealing with the boycotted firms. 

There are three important points of attack against a boycotted 
employer in the use of the secondary and compound boycott. An 
endeavor is often made to boycott him through (a) inducing or coercing 
his employees to quit working for him. One of the weapons employed 
in carrying out this form is picketing. 

Secondly, the workmen often attack the source of supply, and try 
to (b) induce or coerce wholesalers , jobbers , manufacturers or mining 
companies , as the case may be , to refuse to sell any further supplies to 
the employer under the ban. This latter method is used most exten¬ 
sively in the building trades where the products disposed of are not 
finally sold to the general public, but are used in the construction of _ 
buildings. 

The third and generally the most important method of injury 
is the (c) inducing or coercing of customers to withdraw their patronage 
from the obnoxious concern. 

The arguments used to obtain the co-operation of these third 
parties may be merely persuasive or coercive in their nature. The 
employee may be urged simply in the interest of his class to quit his 
job in order to prevent the employer from winning the dispute. He 
may be threatened with violence or he may be inconvenienced in the 
matter of securing a boarding place, or obtaining provisions, on account 
of the threat of the workers to refuse to patronize those harboring or 
selling to him. 

In the building trades and other industries the supplier of material 
may be induced through his sense of justice to refuse to sell further 
supplies to the firm opposed by organized labor. He may be con¬ 
fronted, and often is confronted, on the other hand, with a threat 
that the members of organized labor in other building trades will 
refuse to work on material supplied by him, so long as he continues 
to deal with the “unfair” employer. If this threat does not prove an 
inducement the workers may then appeal to the building contractors 
to cease purchasing supplies from this third party, and threaten the 
contractors with a strike of all the workers on the building if they 
continue their dealing. By this method the contractors often bring 
sufficient pressure on the manufacturer to induce him to refuse to 


UNION POLICIES AND METHODS 


645 


su Pply the obnoxious employer with further goods, and the employer 
in turn is often thus induced to concede the demands of the workers. 

Finally a tertiary or very indirect boycott may be instituted against 
those citizens who continue to purchase from stores selling “unfair” 
supplies. In these cases actual violence is comparatively rare. 

C ) THE METHODS OF BOYCOTTING 1 

After a boycott is declared, circulars setting forth the claims of the 
union are sent to all unions which seem likely to be in a position to 
aid. Special letters are sent to many. Circulars are also distributed 
among the public generally, if the concern has a local patronage, and 
if the goods sold are purchased by large numbers of the laboring 
class. 

The trade unionists are asked to give funds to aid in the boycott, 
to send their delegates to dealers in the boycotted articles, and to 
write letters of protest to the unfair establishments. Delegates from 
the original union are frequently sent to present their claims before 
the trade unionists of other cities, urging co-operation. 

Until 1908 the “We don’t patronize” list, containing the names 
of firms which had not conceded labor’s demands, was published in 
the American Federationist and other labor papers. As a feeble sub¬ 
stitute at the present time, the labor periodicals now often call atten¬ 
tion to and recite the facts of union struggle leaving it to organized 
labor to “do the right thing.” 

Various devices, such as “sandwich men” and transparencies, are 
used to draw attention to the fight. The central labor unions of each 
city are often effective agents to further the interests of boycotters. 

The ingenuity of the unionist is frequently put to a test in his 
endeavor to discover those who deal with the boycotted concern. 
Many are the complaints of the manufacturers that their goods are 
followed to the trains, and the names of the patrons secured before 
shipment. One firm complains that its salesman was followed across 
the continent to the Pacific Coast by a delegate from the trade union, 
and that its dealers were visited and induced to cancel their orders. 
In the case of the newspapers, the paper’s advertisers are often seen 
and urged to discontinue advertising in the “scab” paper, under 
penalty of the boycott. 

1 Adapted with permission from H. W. Laidler, Boycotts and the Labor Struggle, 
pp. 67-68. (John Lane Co.) 


646 THE WORKER IN MODERN ECONOMIC SOCIETY 

d ) THE FUNCTION OF THE BOYCOTT IN MODERN INDUSTRIAL LIFE: 

REASONS FOR THE OBJECTIONS TO IT 1 

The boycott arises—first, where organization by any other means 
is either impossible or unlikely because of the apathy of workmen or 
the hostility of employers, and, second, to supplement strikes which 
threaten to be unsuccessful because the employer has succeeded in 
replacing strikers with strike-breakers. In both cases the boycott is an 
indispensable resource of labor organizations. 

In a campaign of organization which lasted perhaps less than a 
decade and in which the boycott played a prominent part, the Hatters’ 
Union succeeded in organizing one hundred and sixty-six of the one 
hundred and seventy-eight fur hat manufacturers of the country. 
Nor is it correct to assume that the need for the boycott as an organiz¬ 
ing agency has now passed. There still remain whole sections of 
industries and individual establishments which it will be impossible 
to organize without the employment by the laborers of their combined 
purchasing power. 

The objection might here be urged that, although the primary 
boycott bears a close analogy to the strike, the secondary boycott is 
distinctly different in effect from the simple strike, since, like the 
sympathetic strike, it inflicts injury upon an innocent third party. 
For example, a strike against the Buck’s Stove and Range Company 
affects that company alone; a boycott against the same company 
usually affects also its customers, who are in no wise parties to the 
original dispute and against whom the union has no grievance. As 
industry is now constituted, such a result is inevitable. 

Another quality that distinguishes a boycott from a strike is its 
permanence. When a strike is declared off, the factory resumes its 
work as before. The publicity given the boycott, on the other hand, 
and the deep feelings of hostility engendered by its prosecution produce 
more lasting effects. A commodity once advertised as unfair retains 
the stigma for a long time after the boycott is raised. 

e) AN EFFECTIVE BOYCOTT IN ACTION—THE DANBURY HATTERS’ CASE 2 

In 1897 the United Hatters of North America began a national 
struggle for the closed shop. According to the Hatters’ Journal 16 
firms were unionized as the result of the boycott within a period of 

1 Adapted with permission from Leo Wolman, The Boycott in American Trade 
Unions, “Johns Hopkins Studies,” XXXIV (1916), 138-44. 

2 Adapted with permission from Harry W. Laidler, Boycotts and the Labor 
Struggle, pp. 151-56. (John Lane Co., 1914.) “The Supreme Court Decision in 
the Danbury Hatters’ Case,” Survey, XXXIII, 415-16. (Copyright, 1915.) 


UNION POLICIES AND METHODS 


647 


18 months. In April, 1901, Roelof & Company, of Philadelphia, 
were especially subjected to the attention of the unionists. It is 
estimated that the expenditure of $23,000 by the unionists caused 
Roelof a loss of some $250,000 during the boycotting period. 

Then an effort was made to unionize the factory of D. E. Loewe 
& Company of Danbury, Connecticut. Unionists proposed a closed 
shop to Loewe, referring to the fate of other hatters who had withstood 
their demands. Loewe, however, refused to concede. In July, 1902, 
250 employes were called out. The shipping clerk was employed by 
the union to discover the destination of the various assignments. 
He rode on the wagons, made observations in the streets and at the 
railway stations, and reported the results to the union. Customers’ 
names were immediately sent to the unions in whose towns the goods 
were to be delivered, and unionists were requested to write to, or call 
upon, the dealers and to persuade them to cease their dealings. Five 
organizers were routed among unions and leaders in different parts 
of the country. Boycott advertisements appeared in the trade and 
labor journals and descriptions—'false according to the company—■ 
of labor conditions at Loewe’s were sent broadcast. 

The company claimed that this warfare was most effective; that, 
during 1901, the firm made a net profit of $27,000, which decreased 
into a $17,000 net loss in 1902, after the boycott began, and into one 
of $15,000 during 1903. In 1903 the company claimed the loss in 
gross business was $325,390; that the loss of gross business in 1902 
was much less, but still very substantial. The company concluded that 
the net damage caused by the boycott amounted to more than $88,000. 
These items, the company declared, did not take into consideration 
the normal increase in business during the years 1902 and 1903. 

Loewe & Company first filed a suit against the Danbury hatters’ 
union in the United States Court at Hartford, in 1903, charging them 
with violating the Sherman Anti-Trust law. The Supreme Court 
of the United States upon being asked for a ruling on the damage 
clause of the Sherman law declared that the boycotting case came 
within the statute as a conspiracy in restraint of trade among the 
several states. In 1909, the case was brought to trial. 

Over 200 witnesses testified for the defendants, and the trial 
lasted nearly five months. The jury brought in a verdict of $74,000 
damages against the union. This amount was trebled under the 
triple damage provision of the Sherman law. 

A retrial of the case was held in 1912, the jury delivering a verdict 
of $80,000 and costs. The total award was $252,130. The jury 


648 


THE WORKER IN MODERN ECONOMIC SOCIETY 


took the position that the minutes, resolutions, reports, proclamations, 
and printed discussions which the officers and agents of the association 
publicly proclaimed and circulated among the membership were 
approved or warranted by the individual members of the association. 

An appeal was taken to the Supreme Court. In January, 1915, 
it reaffirmed the judgment for $252,130. The decision stated: 

The circulation of a list of unfair dealers, manifestly intended to put 
the ban upon those whose names appear therein among an important 
body of possible customers, is within the possibilities of the Sherman act 
if it is intended to restrain and restrains commerce among the states. 

It requires more than the blindness of justice not to see that many 
branches of the United Hatters and the Federation of Labor to both of which 
the defendants belonged, in pursuance of a plan emanating from head¬ 
quarters, made use of such lists and of the principal and secondary boycott 
in their effort to subdue the plaintiffs in their demands. 

The main question, then, to be determined was whether or not 
the 186 members of the union whose homes and bank accounts had 
been attached had, by their actions, authorized the boycott. The 
court held that the acts could be presumed to be authorized, and the 
members of the union could be held liable if the latter “paid their 
dues and continued to delegate authority to their officers unlawfully 
to interfere with the plaintiffs’ interstate commerce in such circum¬ 
stances as they knew and ought to have known, and such officers 
were warranted in their belief that they were acting in the matters 
within their delegated authority.” 1 

f) ATTITUDE OE COURTS TOWARD BOYCOTTING PRIOR TO 

THE CLAYTON ACT 

i* 

Attitude of our courts toward boycotting .—At the present time the 
great weight of authority both in federal and state courts has been 
against the secondary (indirect) and compound (coercive) boycott. 

In the Danbury Hatters’ decision of the Supreme Court made in 
1908, it was held that boycotting, if interstate in its nature, could be 
reached by the Sherman Anti-Trust Law. Prior to this decision came 
the Debs case of 1895, in which, the boycotting indulged in during 

1 The individual members were, however, relieved of most of the burden by the 
agreement between their locals and the national (the United Hatters) whereby 
the latter was after all to bear the fine.— Editor. 

* Adapted with permission from H. W. Laidler, Boycotts and the Labor Struggle, 
pp. 234-40. Qohn Lane Co., 1914.) 


UNION POLICIES AND METHODS 


649 


the Pullman strike was declared to have been in violation of the 
Interstate Commerce Law, and to have interfered with the United 
States mails. In the Buck’s Stove Company case, the Supreme 
Court of the District of Columbia decided that the “We don’t patron¬ 
ize” list could be enjoined as well as other forms of secondary and 
compound boycotting. 

The vast majority of state courts have also up to the present time 
vigorously condemned the boycott. 

While in many states the courts of last appeal have not as yet 
rendered decisions, the indications are that if malice, threats or 
lack of legitimate interest are shown in the conduct of the boycott 
the use of this weapon will probably be pronounced illegal. It might 
be stated with some degree of accuracy that some twenty-five states 
have definitely disapproved of the use of this device. 

Perhaps a total of five or six states can be classed as favoring the 
employment of the secondary (indirect) or mild forms of the com¬ 
pound (coercive) boycott. 

Legal remedies .—Boycotters may be prosecuted by the state in 
the criminal courts; they may be sued by the party injured in civil 
courts; they may be enjoined by the courts of equity from continuing 
their boycotting activities. 

In criminal procedure boycotters are arrested, charged with violat¬ 
ing those statutes which prohibit criminal conspiracy and other crimes. 
On conviction they are subject to imprisonment or fine. 

In the application of the civil remedy, individually or as a union, 
they are sued in a civil court for damages resulting to the business of 
plaintiff. The common law principles chiefly are applied in these 
cases. 

Boycotters are also subject to the equitable remedy of injunction. 
The plaintiff in this case is required to show that the injunction is 
necessary in order to prevent an irreparable or unascertainable loss; 
and that there is no adequate remedy at law—that the resort to the 
law court would necessitate a multiplicity of suits or would not lead 
to a recovery of damages on account of the irresponsible character 
of defendants. If the injunction is not obeyed, contempt proceedings 
can be resorted to. 

Recently the boycott has been brought under the provisions of the 
Sherman Anti-Trust law. If found guilty, under this act, the defend¬ 
ants are liable for treble the amount of damages. An interference 
with interstate commerce must be shown in this case. 


650 THE WORKER IN MODERN ECONOMIC SOCIETY 


To sum up, the great majority of courts, federal and state, deciding 
on boycott cases, have expressed their disapproval of the use of the 
secondary and compound boycott, although a few courts have pro¬ 
claimed the practice a legitimate one. In those states where the courts 
have pronounced boycotts illegal, the boycotter may be subjected to 
a suit for damages, to a criminal prosecution or to an injunction 
order. 

* *T 

tt l 

A crucial issue in the labor law of today centers upon the “ boycott. ” 
Our discussion of the subject must be understood to relate only to the 
procurement of business isolation by means not unlawful per se, i.e., 
peaceable persuasion of customers, not under contract, to sever their 
relations with the employer, or at most the compulsion resulting from 
a simple refusal on the part of union men to work for or deal with such 
customers unless they cease to do business with the person attacked. 

The tendency in the earlier cases was to apply the “ justification ” 
test to these measures as well as to others not intrinsically illegal. 
But the latest judicial utterances upon the subject exhibit a growing 
inclination on the part of the courts to prohibit unconditionally any 
attempt by the labor unions to exert pressure upon their enemies through 
the medium of disinterested third parties. This principle that “second¬ 
ary boycotts” are unlawful has been copiously discussed in the latest 
decisions, notably in the now famous case, “ Buck’s Stove and Range 
Co. vs. American Federation of Labor , et al., ” through which, by reason 
of the prominence of certain labor leaders who are now under a jail 
sentence for violating its terms, the subject has been forcibly brought 
to the attention of the public. 

We find that the arguments upon which it is attempted to establish 
the illegality of such boycotts are reducable to two basic prosposi- 
tions: (1) Every man engaged in business has a legal right to a free 
market in which to purchase bis labor and sell his product; (2) the 
acts of a combination of persons who, by the characteristic method 
of the boycott, render it difficult or impossible for him to buy or sell 
in these markets violate his legal rights therein. 

It is manifest, first of all, that there is nothing in the quality of 
the damage inflicted by a boycott to give it the character of a legal 
wrong. A stoppage of the labor supply of an establishment may lead 

1 Adapted with permission from John W. Bryan, “Proper Bounds of the Use 
of the Injunction in Labor Disputes,” Annals American Academy Political and 
Social Science (1910), pp. 291-98. 


UNION POLICIES AND METHODS 


651 

as straight to bankruptcy as does a stoppage of the sale of finished 
goods, yet it is perfectly legal to strike and to persuade other persons 
to strike. Again, it is generally held that the conduct of a competitor 
in interfering with his rival's market of sale by underselling him, or by 
offering certain trade advantages to such customers as deal exclusively 
with himself, gives the rival no right of action, although it results, 
and is intended to result in driving him out of the market. Neither 
the quantity nor the quality of the damage so inflicted supplies the 
necessary element of injuria. Many courts profess to find the neces¬ 
sary leaven of illegality in the “coercion” or “intimidation” practiced 
upon the complainant’s customers to “ compel ” them to interrupt, 
their trade relations with him. But a careful analysis of what the 
unions engaged in a peaceable boycott really do must reveal that their 
acts cannot be brought within the legal meaning of these terms. The 
unions simply impose conditions upon the continued bestowal of their 
business patronage, which they have an undoubted right to give or 
withhold as they will. They inform the person who has business 
relations with themselves and also with the person attacked, that in 
the future he may not deal with both parties to the dispute. He is 
required to choose between them. But his choice is untrammelled 
by any consideration other than that which influences^ the decision of 
everyone engaged in competitive business, i.e., regard for his own 
economic welfare. He settles the question according to his determin¬ 
ation as to whose patronage is the more valuable to him. This is 
“coercion” in only a figurative sense of the word. 

The complainant has no vested right in the mental state of another 
person. He cannot denounce as “intimidation” the natural regret 
which his customer may feel at being required to give up one line of 
patronage in order that he may keep another that is more valuable 
to him, and utilize it as a ground of action against those who made 
the choice necessary. Coercion by unlawful acts does give him just 
cause of complaint, upon the theory that illegal acts productive of 
damage to him are none the less wrongful as to him because they 
operate through the medium of third persons. But it is difficult to 
conceive of any theory upon which acts not unlawful as to the third party 
become wrongfid as to the complainant merely because their operation 
is transmitted to him through the third person rather than directed 
immediately against himself. 

The force of these considerations has caused the courts in some 
jurisdictions to seek further for the necessary taint of illegality in a 


652 


THE WORKER IN MODERN ECONOMIC SOCIETY 


boycott. Not infrequently they find it in the fact that the damage 
complained of has resulted from the action of a number of persons 
acting in concert. There is developing a noticeable tendency to hold 
that a combination of persons may not perform certain acts which 
each member of the combination would have a perfect right to do 
if acting singly, by reason of the vastly greater harm which can be 
inflicted by the combination. A sufficient answer to this new principle 
is found in the firmly established principle of the common law, that 
an act lawful in itself is not rendered unlawful by being done by a 
combination of persons. In other words, whatever a man has a right 
to do individually, he may legally do in concert with other men who 
possess similar rights. The contrary view would render unlawful 
every hostile act done by a labor union and productive of damage. 

It should be noted also that this founding of liability upon the 
number of persons who join in the act takes no account of the damage 
of similar character that a single person, under present industrial 
conditions, might be in a position to inflict. The refusal of a single 
wealthy manufacturer or powerful corporation to deal with a person 
as long as he continues to deal with another might have an infinitely 
more “coercive” effect than would similar action by a local trade 
union. 

k 

A much more logical course is pursued by those judges who lay 
down broadly that no person or combination of persons may intention¬ 
ally inflict damage upon another, even by methods not intrinsically 
unlawful, except for the purpose of securing some direct economic 
advantage to themselves commensurate with the injury done to the 
person attacked. The adoption of this principle should remove 
interference with peaceable boycotts inaugurated for “justifiable 
cause, ” while leaving in full operation the power to enjoin unjustifiable 
boycotts. 

Still, the new principle is undoubtedly at variance with the 
established rule of the common Jaw, that an act otherwise legal is not 
rendered unlawful by the existence of a bad motive in the mind of 
the doer. 

Finally, we cannot overlook the complaint of the labor unions 
that the courts with all their legal ingenuity have never been able to 
discover any principle whereby they can effectually protect the 
laborer from “blacklisting,” although he may suffer greater propor¬ 
tionate damage therefrom than is inflicted upon an employer by even 
the most widespread boycott. The conclusion seems to follow, 


UNION POLICIES AND METHODS 


653 


therefore, that the common law furnishes no sufficient authority to 
the courts for their action in issuing injunctions against secondary 
boycotts. 

g) THE NATURE AND PURPOSES OP THE INJUNCTION 

i. A Legal Definition 1 

A prohibitory writ issued by a court of equity to restrain the 
defendants from doing, or permitting others under his control to do, 
an act which is deemed to be inequitable as regards the rights of some 
other party to such proceedings in equity. 

Preliminary (temporary) injunctions are used to restrain the 
party enjoined from doing the wrong complained of before the rights 
of such party have been settled by the court. The sole object of the 
preliminary injunction is to preserve the status quo until the merits 
can be heard. Final (permanent) injunctions are issued when the 
rights of the parties, so far as relate to the subject of the injunction, 
are finally disposed of by the order of the court. 

No temporary restraining order shall be granted without notice 
unless it clearly appears that immediate and irreparable loss will 
result before the matter can be heard on notice, in which case there 
must be a hearing within ten days. The opposite party may move to 
dissolve the temporary restraining order on two days’ notice and the 
matter shall be heard as speedily as possible. 

ii. The Object of the Injunction 2 

The object of the injunction is generally protective and preventa¬ 
tive rather than restorative. It is ordinarily used to prevent wrongs 
or injuries. 

Hi. The Principle behind Injunctions 3 

Equity will not undertake to prevent an injury by an injunction 
unless the injury is irreparable. An injury is irreparable when it 
cannot be adequately compensated in damages or when there exists 
no certain pecuniary standard for the measurement of the damage. 
This inadequacy of damages as a compensation may be due to the 
nature of the injury itself, or to the nature of the property injured 

1 Adapted from Bouviers Law Dictionary , II, 1569. 

2 Adapted from H. C. Joyce, A Treatise on the Law Relating to Injunctions , 
I, 2a. (Mathew Bender & Co., Albany, N.Y.) 

3 Adapted from Henry W. Rogers, “Injunctions,” Cyclopedia of Law and 
Procedure, XXII, 762-64. 


654 


THE WORKER IN MODERN ECONOMIC SOCIETY 


and many courts have said that it may also be due to the insolvency 
or want of responsibility of the person committing it. 

h) AN ACTUAL INJUNCTION 

In May, 1919, about thirty workmen employed by the Thomas G. 
Plant Shoe Company of Boston, Massachusetts, struck, asking for 
the reinstatement of an employee whom they charged had been dis¬ 
charged because of his union activities. Large numbers of other 
workmen in the plant struck from time to time both in sympathy with 
those that had originally left and to secure the recognition of their 
several unions. By the end of June, it was estimated that some 2,500 
were out on strike. The firm secured a temporary injunction in 
September, 1919, and in November, 1920, the following final injunc¬ 
tion was handed down by the Superior Court of Suffolk County. 

THOMAS G. PLANT COMPANY 

vs. 

FRANK GOULD, et al. 

FINAL DECREE 

This case came on to be further heard at this sitting of court and 
thereupon, upon consideration thereof, it is ordered, adjudged and decreed, 
that:—the defendants, Frank Gould, John Burke, Mary Smith, Sarah 
McDonald, William H. Watson, Emelio Marotta and Frank Franzosa, and 
all the members of the United Shoe Workers of America, Local No. 73, 
and all the members of the United Shoe Workers of America, Local No. 15, 
and all the members of the Allied Shoe Workers Union of Greater Boston, 
Massachusetts; and all who hereafter become members of any of said 
organizations, and the agents, servants, and attorneys of each and all of 
them, are permanently enjoined from proceeding with or in any way encour¬ 
aging or supporting the strike described in this Bill of Complaint, or any 
future strike called for any of the purposes alleged in the bill; and from 
paying strike benefits to any of the former employes of the plaintiff now 
on strike! and from in any way intimidating any of the former employes 
of the plaintiff who may desire to return to work; and from intimidating 
in any way any of the present employes of the plaintiff; and from inducing 
or endeavoring to induce any person now or hereafter in the employ of the 
plaintiff to leave such employment; and from inducing or endeavoring to 
induce, compel or persuade any employe of the plaintiff who may be under 
written contract of employment with the plaintiff, whether such contract 
be terminable at will or not, to abandon, breach or otherwise cease fully to 
perform such contract; and from interfering in any way with the business of 
the plaintiff with any person or concern whether or not a member of said 


UNION POLICIES AND METHODS 


655 


union; and from following any of the workmen of the plaintiff in groups; 
and from dissuading persons from accepting employment with the plaintiff; 
and from purposely interfering with employes or customers of the plaintiff 
in the use of the public highways; and from persistently talking with such 
employes regarding their employment or their relations to the defendant 
after they may have definitely objected to further conversation on such 
subjects; and from applying opprobrious epithets to them; and from 
assaulting any of such workmen or encouraging others so to do; and from 
holding out the plaintiff as being unfair or prejudiced against Union Labor; 
and from in any way or manner picketing the plaintiff’s factory or offices; 
and from endeavoring by pamphlets, circular letters or otherwise to persuade 
customers of the plaintiff or others using its manufactured product to cease 
or refrain from having business dealings with it; and from endeavoring to 
promote in any way a closed shop in the plaintiff’s factory, and from doing 
anything designed so to place any of the plaintiff’s employes as more 
effectually to demand or require a closed shop in the factory of the plaintiff 
or in any line of work therein conducted; and from interfering in any way 
with the plaintiff in its dealings or contracts with its employes as individuals. 

By the Court, 

Guy H. Holliday 
Asst. Clerk 

1920, Nov. 4 

i) PROPER BOUNDS POR THE USE OF THE INJUNCTION 

IN LABOR DISPUTES 1 

The jurisdiction of equity to interfere by injunction to some extent 
in labor disputes cannot be seriously questioned at the present day. 
In so far as the courts restrain the performance by employer and 
workman alike of those acts only which plainly infringe upon the 
property rights of another person, to his immediate and irremediable 
damage, their action is clearly beyond the reach of legitimate criticism. 
American labor leaders, however, protest the use of the injunction 
on the ground that since its violation subjects the offender to punish¬ 
ment by fine and imprisonment for contempt of court, after a summary 
trial conducted by the equity judge alone, the effect is to deny him 
his constitutional right to be tried by a jury. 

So far as now appears, these trials have been fairly conducted. 
The accused has been given every opportunity to establish his inno¬ 
cence; and when he has been convicted, there has been little doubt 
that he had done the acts charged. Since, by our very hypothesis, 
the acts enjoined were criminal, it cannot be said that the accused 

1 j. Wallace Bryan, “Proper Bounds for the Use of the Injunction in Labor 
Disputes,” Annals of the American Academy (1910), pp. 288-301. 


6 5 6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


ought not in good conscience to have been punished for them, or that 
in being forbidden to perform them he was unduly restrained of his 
liberty. 

A much more serious problem is presented by the action of the 
courts in forbidding the doing of acts that are not ordinarily regarded 
as unlawful. Modern authority in this country does not sanction an 
injunction against the act of striking, singly or in combination, for 
a good or bad reason. It is reasonably certain, moreover, that if the 
strike is begun for the purpose of directly advancing the substantial 
economic interests of the strikers, the court will permit them to 
utilize a number of peaceful measures, in addition to quitting work, 
to force their employer to terms. Quiet and reasonable requests, 
persuasion and arguments, that do not partake in any degree of 
intimidation, may be addressed to workmen hired in the strikers’ 
places to induce them to join the strike. 

There is considerable authority, however, for the proposition that 
these same acts, if not inspired by “justifiable cause,” give rise to 
legal responsibility to the party injured thereby, and may be enjoined 
regardless of their intrinsic nature, upon the theory that the malicious 
intent to harm another may render unlawful acts otherwise innocent. 

The present attitude of the American courts toward labor disputes 
tends to breed evils as serious as those which they are endeavoring 
to remedy. They announce that labor cases, like all others, must be 
decided according to law, not expediency, and the argument of counsel 
is largely confined to the discussion of legal, not economic principles. 
Yet when the decisions are rendered it is too often apparent that the 
courts have in reality disregarded established legal principles in order 
to register predetermined economic views based upon only a rudimen¬ 
tary knowledge of the situation. The result is to engender in the minds 
of the laboring classes a deep sense of injustice; a growing conviction 
that even the law of the land cannot overcome the bias of the courts 
in favor of the employing class. The consequent impairment of the 
workman’s respect for and confidence in the courts is not to be lightly 
regarded. Its fruits are seen in the appearance of the anti-injunction 
bills, and demands that all judges shall be chosen by popular election 
and for short terms; upon the not unreasonable ground that if, 
instead of applying the law, the judges are also to make sweeping 
changes of questionable value in its content, the people should be in 
a position to exert due influence upon the process. 

In the future, therefore, the courts will act the wise part if they 
interfere by injunction in labor disputes to restrain the doing of acts 


UNION POLICIES AND METHODS 


657 


only that are plainly wrongful according to existing law. Requests 
for action that would involve unauthorized extensions of their power 
to prohibit should be refused, with the answer that the law does not 
warrant judicial interference with the acts complained of, and that 
changes of such radical character must be made by legislatures. 

See also chapter xxviii, The Courts and Organized Labor. 

3. RESTRICTION OF ENTRANCE TO THE TRADE 

a) DIFFICULTY OF TRAINING BOY WORKERS TODAY 1 

In order that the apprentice may become skilled in more than one 
simple and minute class of work, he must be transferred from machine 
to machine and from department to department. At the moment 
when the apprentice becomes proficient in any particular operation 
he should be transferred. Since the foreman, however, is naturally 
more interested in the production of machines today than in the 
training of a boy who may become a skilled worker tomorrow, and 
who may get a job elsewhere, the constant temptation is to teach 
him a few simple operations and to pass on to him certain portions of 
the work hitherto done by skilled men. 

b ) EXTENT OF APPRENTICESHIP LIMITATIONS AND THE PROBLEMS 

OF AN EQUITABLE RATIO 2 

Many unions composed of skilled men demand that the number 
of apprentices in a shop be limited. The length of apprenticeship 
insisted upon is usually three or four years. The common ratio of 
apprentices to journeymen is one to five. In some of the building 
trades a progressive restriction is agreed upon. Only a comparatively 
small number of unions are able effectively to enforce limitation rules. 

The unions having about three-fifths of the total membership do 
not restrict apprenticeship; the unions actually enforcing apprentice¬ 
ship rules contain less than 7 per cent of the total membership. 

In view of the long-continued controversy over the limitation of 
apprentices, it is fitting to inquire what ratio of apprentices will 
maintain a supply approximately equal to the demand for skilled 
men. One rough but fairly adequate test may easily be applied by 
comparing the number of males in the United States of apprenticeship 

1 Adapted with permission from Frank T. Carlton, History and Problems of 

Organized Labor , p. 144. (D. C. Heath & Co., 1911.) 

2 Adapted with permission from Frank T. Carlton, History and Problems of 

Organized Labor , pp. 145-46, 149 - (D. C. Heath & Co.,1911.) 



658 THE WORKER IN MODERN ECONOMIC SOCIETY 


age with the total number of males of journeymen age. The age 
of apprenticeship may be taken to be from sixteen to nineteen years 
inclusive. According to the census of 1900, there were approximately 
three million males of these ages in this country. If the journeyman 
age be held to extend from twenty to forty-four years inclusive, 
there were nearly fifteen million males in this group. This rough 
and easily criticised method indicates that the ratio of apprentices 
to journeymen should be at least one to five. If allowance be made 
for probable growth in the industry, it seems reasonable that a ratio 
of one to four and one-half would not be excessive. 

C ) THE HELPER AND TRADE UNION POLICY 1 

The essential marks of a helper as here defined aie two: first, he is 
employed to promote the work of another; second, he is supervised in 
his work to some extent by the mechanic whom he assists. 

On the other hand, an apprentice is one who, by promise, for 
a specified time, is being taught the trade. The helper, though he 
may be a learner of a trade, is primarily employed because he supplies 
an economic need, and in fixing his wages nothing is deducted for 
instruction given. On the other hand, an apprentice may assist a 
journeyman, but the primary purpose for which he is engaged is that 
he may be taught the trade. 

Since labor organizations in the United States have been formed 
largely on craft lines, it was until recently the common practice of 
craftsmen to exclude from their organization all auxiliary workmen. 

In trades or industries where the journeymen hire and pay helpers 
the journeymen are frequently not consistent in their attitude toward 
collective bargaining. For instance, the potters in agreement with 
the firms establish a wage scale. As employees the journeymen 
potters certainly think it fair and just that they, collectively, shall 
have a voice in fixing wages. However, as employers, the journeymen 
attempt to fix the wages of helpers. 

Again, the Marble Workers’ Union stipulates that no helper can 
be advanced in the trade to the detriment of journeymen or appren¬ 
tices. Naturally the helpers feel that they have a better chance 
for promotion outside of the union than they have in it. 

On the other hand, no independent unions of helpers (with the 
exception of the Firemen, who are a superior type) have been successful 

1 Adapted with permission from John H. Ashworth, The Helper and American 
Trade Unions, “Johns Hopkins University Studies in Historical and Political 
Science/’ Vol. XXXIII (1915). 


UNION POLICIES AND METHODS 


659 


due apparently to the helpers’ lack of initiative and organizing 
ability. Consequently, the vast majority of helpers remain unorgan¬ 
ized, and this has a deleterious effect not only upon their own status 
but upon that of the journeymen they assist. 

Where the helpers are admitted with the journeymen, a double 
problem arises. 

Problems of the mixed national containing separate locals .—In 
most instances where a national union is made up of both journeymen’s 
and helpers’ local unions, the journeymen-insist that the helpers’ 
lodges shall be subordinate in some way to their own. 

In unions which have helpers and journeymen in the same local 
lodges, disagreements concerning the wage scale and promotion are 
less tense than in unions where the helpers are in separate locals. 
The explanation is simple. Where helpers assemble in meetings under 
the domination of the mechanics, they do not have the same oppor¬ 
tunity for launching movements designed for their own betterment. 

d ) THE APPRENTICESHIP PROBLEM AMONG THE PRINTERS 1 

The International has always refused to recommend to the local 
unions that they should adopt any one particular ratio of apprentices 
to journeymen. Consequently the small country offices where 
organization is weak have an almost unlimited number of apprentices 
while the large city offices, especially the newspaper offices, have 
absurdly few. This means that the force of the large office has 
continually to be replenished from the small office or the non-union 
office, and that the union must be incessantly engaged in training 
into the principles of unionism successive bands of recruits. 

But another aspect of the question has always presented itself 
forcibly to the printers. The larger the office, the greater is the 
specialization; and where work is highly subdivided, appientices 
ordinarily receive instruction in only part of the trade. The introduc¬ 
tion of machines has greatly intensified the opposition of the printers 
to the employment of apprentices in large offices and especially in 
newspaper offices. 

The interest of the union in securing a good training for appren¬ 
tices is not merely a matter of sentiment. If a considerable proportion 
of those in the trade are so poorly taught that they can only be 

1 Adapted with permission from George E. Barnett, “The Printers, A Study 
in American Trade Unionism,” American Economic Association Quarterly (1909), 
pp. 168-79. 


66o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


employed at low wages, either the union must lower its minimum rate 
or it must be content to see them become non-unionists. The half- 
taught journeyman, if in the union, is thus a drag on the minimum 
rate, and if out of the union, he menaces the maintenance of the rate. 

The training of apprentices differs widely according to the kind 
of office in which the apprentice is trained. In very small offices, the 
boy gets an all-round knowledge of the trade; but since the equipment 
and technique in such offices are not of high grade, he does not become 
highly skilled in any one branch. Before he can readily gain employ¬ 
ment in the large machine offices, where wages are usually higher, he 
must acquire considerable skill in some one of the branches of the 
trade. On the other hand, the apprentice in the large machine 
office rarely obtains a knowledge of the trade as a whole. 

4. THE EXCLUSIVE RIGHT TO THE WORK OF A 
TRADE—JURISDICTIONAL DISPUTES 1 

A striking illustration of the difficulties encountered by the 
employer when unionists fall out over the question of jurisdiction is 
found in the circumstances attending the erection of the Marshall 
Field and Company building in Chicago in 1906. It was decided by 
the builders to put in for cleaning purposes a new compressed air 
device which included two pipes running side by side, one carrying 
hot and the other cold water. These pipes ended in a sort of scrubbing- 
brush, and the compressed air drew the water back off the floor and 
into a waste pipe. The Plumbers succeeded in getting the contract 
to install this system, and had got as far as the fifth floor of the 
seven-story building when the Sieam Fitters struck. When it 
appeared that no agreement could be reached, the owners, who wanted 
to hurry the completion of the building, announced that they would 
remove all cause for dispute by tearing out the cleaning system. 
This was not satisfactory to the Plumbers, who threatened to strike. 
Meanwhile the Steam Fitters had returned to work, but without any 
helpers, for the local union of steam fitters’ helpers had withdrawn 
its members when the Plumbers made their demands. Because the 
steam fitters were not using helpers, the helpers’ organization succeeded 
in getting several other trades to strike in sympathy with them, and 
work on the building was again tied up. Finally the matter was 

1 Adapted with permission from N. R. Whitney, Jurisdiction in American 
Building-Trades Unions, “Johns Hopkins University Studies,” XXXII (1914), 
98-104, 107, 109-110, 120-22. 


UNION POLICIES AND METHODS 


661 


submitted to arbitration and work was resumed. By these successive 
disputes a two million-dollar job was delayed for days on account of 
an original dispute over eight hundred dollars worth of work, although 
the piping in question was only one one-hundredth or one per cent of 
all the piping in the building. 

5. UNION RULES RELATIVE TO TENURE AND 
PROMOTION: THE PRINTERS 1 

Until within a comparatively recent period, the rules of the union 
did not restrict the power of the foreman to hire and discharge. 

In 1890 the International enacted the rule since known as the 
“priority law.” Foremen might still “employ help at will”; but 
the grounds on which they might discharge were now stated. Incom¬ 
petency, violation of rules, neglect of duty, and decrease of the force 
were to be good reasons for a discharge. A discharged employee 
was to have, on demand, a written statement of the cause of his 
discharge. Included in the rule was also a declaration that a woman 
competent to “sub” in an office was competent to hold a regular 
situation. The “priority law,” as thus formulated and since devel¬ 
oped, in the first place, limits the right of the foreman to discharge, 
and secondly, it gives to a substitute working in an office a preferen¬ 
tial right as against an outsider to a vacant regular situation. For 
the sake of clearness, the two parts of the rule will be treated 
separately. 

Tenure of position .—This rule has been altered until, in 1909, it 
requires that in case of a decrease in the force the person last employed 
must be the first to be discharged. The purpose of these changes 
was to make it impossible for a foreman to “weed out” his force 
in dull times. Wherever the “priority law” is enforced in its entirety 
and without evasion, the power of the foreman to discriminate between 
merely competent and better men is seriously diminished. 

No part of the union’s trade policy has met more serious criticism 
within the union, and the opponents of the rule have brought out with 
great clearness its more important results as follows: ( a ) The power 
of men of superior efficiency to secure employment in preference to 
workmen of fair skill is greatly lessened. ( b ) The incentive to high 
efficiency on the part of the workman is lessened, (c) The employer 
is less likely to pay superior workmen more than the minimum rate, for, 

1 Adapted with permission from George E. Barnett, The Printers, “Publica¬ 
tions American Economic Association,” (1909), pp. 228-42. 


662 


THE WORKER IN MODERN ECONOMIC SOCIETY 


if they leave his service, they must begin at the bottom of the list 
in some other office, (d) Finally, the mobility of labor is decreased. 
A substitute with “priority” in one office cannot accept a situation in 
another office without losing his “priority ” in the first. He therefore 
remains where he is, although the other situation may be better. 

The effects of the “priority law” in the directions indicated are 
as yet slight, since the rule has been fully laid down only within very 
recent years, [1909] and, more important still, only a part of the local 
unions have applied themselves enthusiastically to its enforcement. 

6. RESTRICTION OF OUTPUT 

a) REASONS FOR RESTRICTION 1 

Restriction of output by employees is usually justified by the 
“lump-of-work” argument. According to the lump-of-work argu¬ 
ment there is a certain quantity of work to be performed. This 
quantity is assumed to be practically fixed irrespective of the expenses 
of production. By “taking it easy,” workers may make jobs for 
other workmen. Economists have often condemned the lump-of-work 
argument as a transparent fallacy; but the trade unionist still clings 
to it. 

It must not be forgotten that the economist assumes freedom of 
competition and the mobility of labor, and that he is chiefly concerned 
with long periods of time. The trade unionist is interested in practical 
affairs in which economic friction bulks large, and he is intent upon 
the “short run.” He sees that by “nursing” a particular job, he 
may work longer or another fellow workman may be employed. 
This is something tangible, the other is a remote and uncertain 
possibility. 

Consider such a business as the stove or the window-glass industry. 
The demand for stoves or for window glass does not vary in a manner 
commensurate with changes in the market price of those articles. 
There is a demand which does not vary greatly from year to year; 
or, if it does vary, the variations are due to changes in business 
conditions rather than to any changes in the price of stoves or of 
window glass. From the point of view of the skilled stove molders 
or the window-glass workers, there is a real, concrete lump of work. 
If some of the stove molders or of the window-glass workers “rush” 
or “increase the pace,” the others will be thrown out of a job. Some 
will be idle or they will be forced into other industries. Manu- 

1 Adapted with permission from Frank T. Carlton, History and Problems of 
Organized Labor , p. 182. (D. C. Heath & Co., 1911.) 


UNION POLICIES AND METHODS 


663 


facturers dearly recognize that the market will carry only, so much 
of their product, and a certain lump-of-work is required to make this 
product. It is this particular lump-of-work in which the trade 
unionist is interested. President Lynch of the Typographical Union 
is reported to have stated that the printers spent about $4,000,000 
to establish the eight-hour-day, and that “for years to come there 
will be such a demand for printers that all who thoroughly learn the 
trade will be paid wages over any scale heretofoie adopted.” 

The lump-of-work argument is surely not fantastic as long as 
class or interest antagonisms play an important role in social and 
political affairs, and in a country where each person is still expected 
and urged to look out for “number one.” 

b ) RESTRICTION OE OUTPUT BY ORGANIZED LABOR 

i. Methods of Restriction 1 

1. The output per hour of the individual may be limited directly. 
Thus the bricklayers have a rule that bricks shall not be laid with 
more than one hand, and prohibit the use of any implement other than 
the trowel in spreading mortar. Some years ago the carpenters of 
Chicago adopted the following rule: “Any member guilty of excessive 
work or lushing on any job shall be reported and shall be subject to 
a fine of five dollars.” 

2. Certain regulations relating to the use of machines also aim 
at restriction of output. Five distinct classes may be distinguished: 
( a) the actual prohibition of the use of the machine, attempted by 
the window-glass workers and the cigar makers; ( b ) ihe limitation 
of the output of the machine, as required by the soft coal miners; . . . . 
(1 d) requiring several men upon one machine, as is demanded by the 
pressmen and the stone cutters; ( e ) requiring skilled men to operate 
the machines, as has been done by the printers in regard to the lino¬ 
type. 

3. Union regulations in regard to division of labor may cause 
restriction of output. Some unions have attempted to prevent the 
splitting up of skilled work. Subdivision of labor, at least within 
certain indefinite limits, increases the dexterity and the proficiency 
of members of a group and tends to increase the total output of the 
group. It must not be overlooked, however, that subdivision of 
labor is often utilized as a method of reducing wages rathei than of 
increasing output. 

1 Adapted with permission from Frank Tracy Carlton, History and Problems 
of Organized Labor, pp. 129-30. (D. C. Heath & Co., 1911.) 


664 


THE WORKER IN MODERN ECONOMIC SOCIETY 


ii. Interference with the employer's method of wage payment 

The policy of a union in substituting day work for piecework 
excludes an undoubted method of inciting speed, and is therefore 
as much of a restriction on output as would be the exclusion of a speed- 
increasing machine. 

Since as a rule the union day wage is nominally only a minimum, 
it would appear that the employer could offer to the speedier men a 
wage higher than the minimum, and thus gradually raise the level of 
speed, should he see fit. This indeed does occur in various trades, 
but its full and free operation as a means of inducing speed is checked 
by two or three conditions generally insisted on by the unions. In the 
first place, the payment in excess of the minimum must not be com¬ 
puted in proportion to output, since this would establish a bonus system 
and a dead line, both of which are practically a return to piecework. 
In the second place the minimum is usually placed so high that, in 
the estimation of the employer, he cannot afford to pay more than 
the minimum. As a matter of fact it has been found that where 
the minimum scale is in vogue the wages range very close to the 
minimum, but in non-union establishments there is a much wider 
range between the lowest and highest extremes (boots and shoes). 
Furthermore, where a union has succeeded in establishing the day 
system, the employer is usually cautious in basing his discrimination 
between employees on the item of speed, and consequently, bases it 
on quality instead. In the case of several industries the key to 
the enforcement of restrictions on output is found in restrictions 
on the employer’s freedom in employing and discharging men. Where 
the employer is perfectly free, as he usually is in a nonunion establish¬ 
ment, to “take on” or “let go” his men without notice, he is able 
to select the speediest men, giving them the steadier jobs and leaving 
the irregular and seasonal work to the slower man. In this way the 
competition of the men among themselves forces up the speed of all. 
Where a union interferes with this freedom it tends to give to the 
men a feeling of security in holding their jobs regardless of efficiency. 
That restrictions on hiring and discharging workmen are the ultimate 
source of restrictions on output is made plain from the repeated 
testimony in nearly all trades that in times of prosperity, when there 
is a strong demand for labor, the average output of the workman falls 
below that of periods when the supply of labor exceeds the demand. 

1 Adapted from Eleventh Special Report , United States Commissioner of Labor 
(1904), pp. 17-29. 


UNION POLICIES AND METHODS 


665 


Men will not work as hard when they can get work in other establish¬ 
ments as when they feel that their chances for other employment 
are slim. 

c) SOME PARTICULARLY FLAGRANT ILLUSTRATIONS OF 
RESTRICTIONS UPON OUTPUT 1 

The so-called Lockwood Committee was created in 1919 by the 
New York Legislature to investigate the housing shortage. They 
uncovered shocking practices which were being used both by employers 
and by union officials. Thus some officials, notably Robert Brindell, 
were using their power to call strikes as a means of levying blackmail 
upon contractors; BrindelEs extortions were estimated at over $1,000,- 
000 in less than a year. Large groups of employers, on the other hand, 
were combined in associations to keep up the price of building materials 
and of construction. These employers, moreover, had an agreement 
with most of the unions that labor would not be furnished to any 
contractors outside of the association. The unions were therefore 
being used to prevent the competition of independents. 

Some of the examples of restriction of output practiced by the 
unions and reported by the committee were: 2 

The requirement of the metal lathers that where reinforced 
concrete is mixed at the shop, where it can be more economically done, 
and brought to the building, the owner must pay a bonus into the 
sick benefit fund of the Lathers’ Union at the prescribed rate based 
on the labor cost thus claimed and estimated as saved, of $6 per ton 
on cut steel and $18 per ton on fabricated steel. 

Compelling an employer to finish his ceiling by using wire lath 
instead of as provided by the specifications although these specifica¬ 
tions were duly approved by the public authorities. 

The various prohibitions contained in the Constitution of the 
Plasterers’ Union against the use of casts over a prescribed size being 
manufactured in the shops and the requirement that this work must 
be run on the walls and ceilings at an expense greatly in excess of the 
cost of bringing them to the job from the shop. 

The requirement that models made for plastering, including stock 
models, must be destroyed after being once used so as to supply more 
work for the modelers than if the model were used over and over 
again as would otherwise be done, thus compelling unpardonable 
economic waste. 

1 Prepared. 

2 See the “Intermediate Report of the Joint-Legislative Committee on Hous¬ 
ing/’ State of New York Legislative Document , No. 60 (1922), pp. 56-58. 


I 


666 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Preventing the mixture of plaster-of-paris with Keene cement in 
the making of mantels, the effect of one of which prohibitions was to 
prevent the owner from installing the mantels already made and to 
compel him to recast them. The purpose of the prohibition was said 
to be to prohibit the owner from adopting this method of making the 
mantels for the reason that in this way he could manufacture four 
mantels at cost of one mantel made the other way and thus effect 
a saving in labor which the union compelled him to forego. The 
Plumbers’ Union also refused to handle certain appliances made 
in the shop such as the anti-siphon trap and plumbing and gas fixtures 
that come to the building with the furnishings attached and forced the 
plumbers to be permitted to attach these furnishings on the job. 

A somewhat extreme case occurred in the construction of the 
Ambassador Hotel, when the Plasterers’ Union compelled the owner 
to tear down part of a wall because the plasterers’ agent did not 
like the color or style of the imitation of Travatine marble. 

It was also found that the unions in general fined and disciplined 
members for the offense of “rushing” or “driving.” 

The investigation of the Chicago building trades by an Illinois 
legislative committee disclosed substantially similar conditions. 

d) THE EFFECT OF RESTRICTION OF OUTPUT—LABOR’S SHARE OF 
INDUSTRIAL WASTE IN 1921, AS SCIENTIFICALLY ESTI¬ 
MATED FOR SIX REPRESENTATIVE INDUSTRIES 1 

This table gives percentage values for each of the agencies against 
which responsibility for waste is assessed, as follows: 

TABLE XCI 


Industry Studied 

Responsibility 
Assayed 
against Man¬ 
agement 
(Per cent) 

Responsibility 
Assayed 
against Labor 
(Per cent) 

Responsibility 
Assayed 
against Out¬ 
side Contacts 
(the Public, 
Trade Rela¬ 
tionships, 
and Other 
Factors) 
(Per cent) 

Men’s Clothing Manufacturing. 

75 

16 

9 

Building Industry. 

65 

21 

14 

Printing. 

63 

28 

9 

Boot and Shoe Manufacturing. . 

73 

II 

16 

Metal Trades. 

81 

9 

IO 

Textile Manufacturing. 

50 

10 

40 


1 Taken with permission from Waste in Industry , p. 9. (Federated American 
Engineering Societies, Washington, D.C., 1921.) 














UNION POLICIES AND METHODS 


667 


The quantities presented above justify the following statement: 
over 50 per cent of the responsibility for these wastes can be placed 
at the door of management and less than 25 per cent at the door of 
labor, while the amount chargeable to outside contacts is least of all. 

7. TRADE UNION INSURANCE 1 

The American trade unions have developed beneficiary functions 
far more slowly than the trade unions of England and Germany. 

The history of trade-union beneficiary activities in the United 
States may be roughly divided into three periods. In the first, 
extending from the beginning of the century to about 1830, the local 
associations laid great stress on their beneficiary functions. 

American trade unionism owed its origin as much to the desire 
to associate for mutual insurance as to the desire to establish trade 
rules. The second period, from 1830 to 1880, was marked by the 
subordination of beneficiary to trade purposes. 

The development of beneficiary functions by the leading national 
unions began about 1880. It was argued with much force that the 
benefits were a direct aid in the accomplishment of trade purposes. 
In the first place, successful systems of benefits, whether they attract 
members or not, undoubtedly assist in retaining them. 

A second effect of the introduction of benefits is the strengthening 
of the national treasury. A union without beneficiary functions 
usually has small reserve funds or none at all. The effect of the 
introduction of beneficiary features is, in the first place, to increase 
the funds which may in an emergency be used for strike benefits, 
and more important, perhaps, the members, accustomed to paying 
a considerable sum weekly or monthly for benefits, are less reluctant 
to vote assessments adequate for carrying on vigorously the trade 
policies of the union. 

The development of beneficiary systems has, however, not been 
guided chiefly by the consideration as to what benefits would most 
aid the trade unions in enforcing their trade policies. The unions 
have chosen rather to develop those benefits for which there was the 
greatest demand. 

In 1907 of sixty-seven national unions paying benefits of all kinds, 
sixty-three paid death benefits, twenty-four paid sick benefits, eight 

1 Taken with permission from J. B. Kennedy, Beneficiary Features of American 
Trade Unions , “ Johns Hopkins University Studies in Historical and Political 
Science,” Vol. XXVI (1908), 9, n, 16, 17, 18. 


668 


THE WORKER IN MODERN ECONOMIC SOCIETY 


paid travelling benefits and only six paid out-of-work benefits. The 
International Typographical Union has also developed a system of 
old age pensions. The benefit which is most effective as an aid to the 
enforcement of collective bargaining is out-of-work relief. This it 
will be noted has been adopted by very few unions. On the con¬ 
trary, the death or funeral benefit of small amount is by far the 
predominant form of national trade-union benefit. Probably no 
other benefit offers as little support to the militant side of trade 
unionism. The leasons for the greater development of this benefit are, 
first, the great need among many trade unionists for benefits of this 
kind. Secondly, the administration of a small funeral benefit presents 
few difficulties as compared with the sick or out-of-work benefit. 

In general, the more highly developed the beneficiary functions 
of the national unions become, the less freedom the local unions are 
given in carrying on such functions. The local unions still play, 
however, a large role in the payment of benefits and it is probable 
that the sum which they disburse for such purposes does not fall 
far short of the amount expended by the national unions. 

8. COLLECTIVE BARGAINING IN ACTION—TRADE 

AGREEMENTS 

a) A THIRTY-YEAR EXPERIENCE WITH A NATIONAL AGREEMENT— 

THE STOVE INDUSTRY 1 

The first written agreement between employers and employees 
in the iron foundry trade of which any record is found was made in 
Cincinnati in 1874. It was drawn up by the founders and offered 
to the officers of the local iron molders’ union, who accepted and signed 
it in behalf of the union. It was regarded by the founders generally 
as an unwise innovation; for any changes in the market might leave 
the employers thus obligated at a disadvantage with respect to their 
competitors. 

As stated above, the founders were organized locally in some places, 
but no permanent general association existed until the formation of 
the National Stove Manufacturers’ Association in 1872. It was 

1 Adapted from (1) F. W. Hilbert, “Trade-Union Agreements in the Iron 
Molders’ Union,” in Hollander and Barnett, Studies in American Trade Unionism , 
pp. 225-60. (Henry Holt & Co., 1905.) (2) J. P. Frey, “A Thirty-Year Experience 
in Industrial Democracy,” International Labor Review , V, No. 4, 540-52. The 
earlier part of the article is adapted from Mr. Hilbert’s essay; the latter part from 
that of Mr. Frey. 


UNION POLICIES AND METHODS 


669 


organized primarily for the purposes of regulating prices, introducing 
new methods, and diffusing information relating to the trade. For 
ten years it took no action in regard to labor questions except to 
denounce the Iron Molders’ Union and its methods. 

Conditions during the next few years appeared to the manu¬ 
facturers to become worse, as the Iron Molders’ Union increased in 
numbers, and dictated conditions of employment more and more 
irritating to a larger number of founders. Finally, in the fall of 1885, 
a few of the most determined members of the Stove Manufacturers’ 
Association resolved to take a definite stand in opposition to the 
Iron Molders Union. Inviting fellow manufacturers to join them, 
they organized the Stove Founders’ National Defense Association 
in order, as set foith in a secret circular, “to rid themselves of the 
tyranny of the Iron Molders’ Union, and to run their several works 
unhampered by its restrictive influences.” 

The two organizations did not come immediately into conflict 
until 1887, when the molders of Bridge, Beach & Co., St. Louis, 
made a demand for 15 per cent increase in prices, and being refused, 
went on strike. According to their prearranged plan, the Defense 
Association sent the patterns of the firm to other members of the 
Association, and as in every case the molders refused to work on them, 
the strike spread until five thousand molders in fifteen cities were 
involved. The result was in the nature of a drawn fight. 

Commenting upon the St. Louis struggle, the president of the 
Iron Molders wrote in the Journal for June, 1887 (p. 6); “A decided 
impression has been made on both parties, of the stability of each 
opposing organization. But, gentlemen, let us see if we can’t act 
in a more commendable manner in settling our difficulties, and not 
resort to the destructive methods which are so injurious to both 
parties.” The piesident of the Defense Association took a similar 
view of the matter, and recommended that the Defense Association 
appoint a committee to meet a similar committee from the Molders. 
But a number of conservative members in the Defense Association 
opposed the recognition of the Iron Molders’ Union in any way, and 
their influence prevented any closer relations at the time. 

President Fox of the Molders’ Union addressed a proposal to the 
Defense Association on December 1, 1890, for a general agreement 
between the two organizations. The proposal was accepted, and 
committees from these bodies met in joint conference in Chicago 
on March 25, 1891. 


670 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The problem that met the conferees at the outset was to find some 
equitable mode for the settlement of differences. Neither side 
especially favored arbitration by means of a committee composed 
of an odd number of members. Many disputes had been arbitrated 
since the organization of the Iron Molders’ Union but in very few 
cases did arbitration give satisfaction; and that method, it was 
argued, was not likely to succeed on a general plan, for the following 
reasons; (1) Neither party was inclined to concede anything in a 
conference, as each would expect to win through the odd man, who 
would generally be disinterested, but without intimate knowledge 
of the business; (2) it would be difficult to secure the services of a 
man acceptable to both parties, because few such men would be 
willing to serve, even when agreed upon; (3) issues would multiply, 
and extremely unjust, and even lidiculous demands would be made, 
because of a chance to gain through the odd man, while no possible 
loss could be suffered. 

The method of arbitration, as commonly understood, being 
eliminated, it was agreed to try the method of conciliation within the 
trade. Accordingly it was deemed wise to begin with a simple state¬ 
ment of general principles, and to provide for their practical applica¬ 
tion to actual trade problems. It was recognized that at that time 
no general wage rate or piece prices could be adopted, and that no 
agreements on matters affecting shop management and shop practices 
could be framed. It was left to time and the educational effect of 
annual contact and conference, to effect a common understanding on 
these subjects. The text of the first agreement was as follows: 

Clause 1. Resolved, That this meeting adopt the principle of arbitration 
in the settlement of any dispute between the members of the I.M.U. of N.A. 
and the members of the S.F.N.D.A. 

Clause 2. That a conference committee be formed consisting of six 
members, three of whom shall be stove molders appointed by the Iron 
Holders’ Union of North America, and three persons appointed by the 
S.F.N.D.A., all to hold office from May 1 to April 30 of each year. 

Clause 3. Whenever there is a dispute between a member of the 
S.F.N.D.A. and the molders in his employ (when a majority of the latter 
are members of the I.M.U.) and it cannot be settled amicably between 
them, it shall be referred to the presidents of the two associations before 
named, who shall themselves, or by delegates, give it due consideration. 
If they cannot decide it satisfactorily to themselves they may, by mutual 
agreement, summon the conference committee, to whom the dispute shall 
be referred, and whose decision by a majority vote shall be final, and binding 
upon each party for the term of twelve months. 


UNION POLICIES AND METHODS 


671 


Pending adjudication by the presidents and conference committee, 
neither party to dispute shall discontinue operations, but shall proceed with 
business in the ordinary manner. In case of a vacancy in the committee 
of conference, it shall be filled by the association originally nominating. 
No vote shall be taken except by a full committee, or by an even number 
of each party. 

The conference committee provided by Clause 2 of the above 
agreement has met every year since 1891. Minor disputes have 
invariably been settled by the officers of the two organizations, and 
only questions of vital importance, such as those concerning wages 
and shop regulations, have been referred to the committee. Even 
where no agreement is reached, the views of both parties are likely to 
be considerably modified by the discussion. This general agreement 
has virtually removed the need for local agreements between the 
Iron Molders and the members of the Defense Association. 

The several agreements deal in detail with the questions of 
(<z) wages, ( b ) length of the labor day, (c) open shop, (d) apprentice¬ 
ship, ( e ) molding machines. 

a) Since 1892 annual wage agreements have been entered into. 
Piece rates were fixed at the second conference and are known as 
‘‘board” prices. From the time of the first agreement until r899 
there were no advances in wages but since then there have been a 
number of advances and two reductions. Individual piece-rate 
prices have also been changed and adjusted. 

b) Hours .—The 1908 agreement established a seven-hour day for 
actual molding; in 1910 a compromise was made on six and a half 
hours, making the actual working day in the foundry from eight to 
eight and one-half as a considerable amount of woik has to be done 
after the actual pouring of the molds is completed. In r9i8, an agree¬ 
ment established the eight-hour working day with payment for 
overtime at the rate of time and a half. 

c ) Open shop .—The agreements of the Iron Molders are peculiar, 
in that although few of them provide for the exclusive employment 
of union men, yet there are many shops where only union men work. 
The explanation lies in the fact that the union has so thoroughly 
organized the trade that nearly all the best molders are in the union, 
and whenever a founder increases his force, it' must be with union 
men. The union has unionized the open shops, rather by inducing 
the molders to enter the union, than by bringing pressure to bear 
upon the employer to discharge non-union men, or to force them to 
join the union. 


672 THE WORKER IN MODERN ECONOMIC SOCIETY 

d) When the two associations met in their first conference, the 
question of the ratio of apprentices was considered. At that time 
the union’s ratio was one apprentice to the shop and one for every 
eight molders employed. The foundry owners claimed that this did 
not supply a sufficient number of molders to maintain the industry. 
As time passed, the data collected by the foundry owners made it 
clear that their claim was a just one and eventually the officers of 
the molders’ union were convinced that the change was necessary. 
As it was necessary to amend the constitution of the union, the 
officers submitted the question to the referendum vote of the member¬ 
ship. Despite the earnest efforts of the officers such a proposal was 
twice defeated. Finally in 1904, they succeeded in getting the ratio 
reduced to a one to five basis. In this manner one of the first grave 
questions was settled on its merits through the application of educa¬ 
tional methods instead of force. 

e) Some years later, another question of serious importance arose. 
The molding machine had been introduced into the foundries to take 
the place to some extent of hand labor, and it was intimated that the 
use of the machines would eliminate the union from the foundries. 
The owners instead of placing apprentice boys on the machines, 
employed full-grown adults, while the molders as a matter of self¬ 
protection classified these as apprentices. 

Unsuccessful efforts were made to reach an understanding and 
finally both associations agreed that regardless of what the machine 
was capable of doing, its operation should not result in reducing the 
molder’s total earning. The foundry owner should enjoy whatever 
advantage came through the increased output but the molder should 
suffer no reduction in his total earnings. 

In the early days of the agreement with the Defense Association, 
the officers of the International Union had some difficulty in breaking 
the local unions’ inveterate habit of walking out of the shop after 
submitting a grievance to their employer, instead of continuing at 
work in accordance with the agreement. But the men invariably 
obeyed when ordered back, although upon several occasions the 
national officers added the threat to fill their places with other moldeis, 
if they did not return. Similarly, in several instances, the stove 
manufacturers locked the molders out, instead of following the 
provisions of the agreement in the case of grievances; but on each 
occasion, the Defense Association refused to sustain the offending 
member, and the men were taken back without discrimination. 


UNION POLICIES AND METHODS 


673 


With this qualification, the agreement has not been violated during 
the thirty years of its life, either by the union or by the Defense 
Association, although in the year 1903 alone, some two hundred and 
fifty disputes were adjusted under the provisions of the agreement. 

In attempting to deal fairly with the Defense Association in the 
adjustment of disputes, the Iron Molders have established respect 
and confidence. In 1885, one of the largest stove manufactuiers 
in the country said that if the trade union organization could be 
dissolved entirely “it would be beneficial to our employers’ associa¬ 
tions, the public and the workmen themselves.” Nineteen years 
later, the same manufacturer stated, “I have been shown the error 
of my ways and I am prepared to say now that it is the wise employer 
who encourages rather than discourages unionism. In order to make 
agreements effective, you must recognize the union.” 

b) EXPERIENCE WITH TRADE AGREEMENTS—CLOTHING INDUSTRY 1 

Adjustment of disputes .—One of the principal factors in the reduc¬ 
tion of shop strikes has been the substitution, under agreements, of 
more orderly means of giving expression to grievances. The machinery 
for adjusting controversies has been one of the most successful develop¬ 
ments under the clothing agreements. 

The immediate injection into all disputes of expert adjusters—one 
representing the employei or his association, the other representing 
the union—has been of great value in meeting these difficulties in 
their earliest stages. These adjusters, it should be noted, combine 
the functions of mediators and arbitrators. Furthermore, the system 
of referring disputes not adjusted in the above manner to outside 
impartial arbitrators, or to trade boards presided over by such arbi¬ 
trators has, in general, proved satisfactory. Such at least has been 
the case when the matters adjudicated have been individual grievances, 
or issues involving merely the application or interpretation of the 
existing agreement. 

Where, however, outside arbitrators have been empowered to 
deal with all matters, whether covered by the agreement, or not, and 
to pass upon the modification of the agreement itself in a quasi¬ 
legislative capacity, less satisfactory results have been attained. 
The tendency under recent agreements has been to leave such matters 
to be settled between employers and the union directly. 

1 Adapted from Research Report Number 38 by the National Industrial Con¬ 
ference Board, New York, June, 1921. 


674 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The impartial chairman, no matter how great the authority 
committed to him by the parties may be, is in practice a mediator 
and not a judge. The process of settling a disputed issue is one of 
constant communication with both sides, not solely by hearings as 
in a court of law, but personally and privately and always with a 
complete absence of formality. The ultimate decision represents 
an accepted solution rather than a judicial decree. Under the 
circumstances it is not surprising that the personality of the impartial 
chairman, no less than his knowledge of the industry with which he is 
concerned, plays a large part in the success of the machinery. 

Effect on production .—Output under agreements in the clothing 
industries has been adversely affected by three principal factors— 
reduction of the work week, substitution of week-work for piece-work 
and relaxation of discipline, due to limitations placed upon the 
employer’s power to discharge. 

Under the agreements of the stronger employers’ associations, 
it has been specified that workers might be discharged for such 
reasons as inefficiency or insubordination. In practice, it has been 
difficult to discharge any worker except for the most flagrant derelic¬ 
tion because of the difficulty of proving clear cases of inefficiency or 
insubordination. 

Favorable influences on output .—In certain ways, on the other hand, 
production has been helped rather than hindered by the existence 
of agreements. The decrease in the number of shop strikes under 
agreements has been already noted. This has bettered output 
through reduction of lost time and avoidance of shop disorganization. 
Labor turnover in these industries, while not markedly affected by 
agreements, seems in a number of instances to have been somewhat 
reduced, with consequent benefit to production. In certain cases 
favorable effects on output have been noted, due to improved factory 
morale under agreements. 

Wages .—During the period covered by agreements, wages in the 
clothing industries have been raised from comparatively low to 
comparatively high levels, and hours diminished. However, such 
changes must not be regarded as having been caused by the agree¬ 
ments. During the period of war prosperity wage increases were 
secured by unorganized as well as organized workers in all industries. 
In the clothing industries these increases were gained by the force 
which the unions, aided by such economic factors as labor shortage 
and heavy demand for products, were able to exert. 


UNION POLICIES AND METHODS 


675 


Agreements have served to place wage terms definitely on record 
and thus rendered them somewhat more secure against arbitrary 
change, and reduced the probability of their being made subjects of 
dispute. It is this stabilization of wages which, because it enables 
him to predict his labor costs, has been one of the principal advantages 
the employer hopes to derive from the adoption of a trade union 
agreement. 

Hours. —As already noted, there has been a general reduction of 
hours in the clothing industries, during the period covered by agree¬ 
ments, from 52 or 54 hours and over, to 44 per week (in a few cases 
48). The same considerations apply to these reductions as to wage 
increases—agreements have not caused, but have merely recorded 
the changes. Agreements have, however, been modified less frequently 
in their hour terms than in their wage terms, so that the stabilization 
of cost factors desired by employers has here been partially realized. 

Employee morale. —The installation, under an agreement, of an 
effective system of grievance adjustment where none had previously 
existed seems in some instances to have produced a better attitude 
among employees toward their work, though it has required consider¬ 
able readjustment by the employer in respect of shop discipline. 
On the other hand, where a high degree of “house loyalty” has 
already been built up, such a loyalty may be weakened upon the 
conclusion of an agreement Under which the employee looks not to 
the employer but to the union for the determination of his wages, 
hours and working conditions, and to the outside “impartial chair¬ 
man” for the final adjustment of his grievances. 

Security of employment. —As already noted, the unions have not 
only succeeded in protecting their members against arbitrary discharge, 
but, in many instances have rendered their discharge for due cause 
extremely difficult. In most of the clothing industries, unless the 
employee is guilty of peculiarly flagrant misconduct or voluntarily 
leaves his job, his tenure in it is practically permanent, it being 
understood that when he is laid off in the slack season he is to be 
given his share of such work as becomes available during that season 
and is to be employed again in the next busy season before any new 
worker may be hired. 

Preparation for control of industry. —Certain of the labor unions 
in the clothing industries, in pursuance of general socialistic policies 
declare that their ultimate aim is the control by the workers of the 
industries in which they operate. 


676 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Under agreements union officials have enhanced opportunities for 
becoming familiar with the problems of management. It is, however, 
a speculative possibility that such contact may serve to discourage this 
aim by correcting erroneous notions entertained by some union workers 
regarding the managerial side of industry. This is borne out by the 
frequent testimony of employers to the effect that union leaders be¬ 
come easier to deal with as they acquire increasing experience. 

9. THE ULTIMATE AIMS OF TRADE UNIONISM. 

A RADICAL VIEW 1 

It is an indisputable fact that the trade unions always act upon 
the policy of taking all they can get from their exploiters. Let me 
quote from a booklet, written by myself several years ago: “It is 
idle to say that the trade unions will rest content with anything short 
of actual emancipation. For they are as insatiable as the veriest 
so-called revolutionary unions. In the measure that their strength 
increases, so do their demands. They have sent wages up: 2, 3, 4, 
5, 6, 7, 8 dollars per day, and hours down: 12, n, 10, 9, 8, 7, 6, per 
day with all kinds of other concessions sandwiched in between. And 
now they are more radical in their demands than ever before in their 
history. Permanently satisfied trade unions under capitalism would 
be the eighth wonder of the world, outricalling in interest the famous 
hanging gardens of Babylon. They would be impossible. With its 
growing power, Organized Labor will go on winning greater and 
greater concessions, regardless of how profound they may be. It is 
purest assumption to state that the trade unions would balk at ending 
the wages system.” 

Why, then, have these strongly anti-capitalistic qualities been so 
long and generally ignored and the trade unions considered merely 
as palliative bodies? In my opinion it is because they, like various 
other aggressive social movements, have more or less instinctively 
surrounded themselves with a sort of camouflage or protective coloring, 
designed to disguise the movement and thus to pacify and disarm 
the opposition. This is the function of such expressions as, “A fair 
day’s pay for a fair day’s work,” “The interests of Capital and Labor 
are identical,” etc. In actual practice little or no attention is paid 
to them. They are for foreign consumption. The fact that those 
who utter them may actually believe what they say does not change 
the situation a particle. Most movements are blind to their own 

1 Taken with permission from William Z. Foster, The Great Steel Strike , 
pp. 257-60. (B. W. Huebsch, 1920.) 


UNION POLICIES AND METHODS 


677 


goals anyway. The important thing is the real trend of the movement, 
which is on the one hand a constantly expanding organization, and 
on the other one of constantly increasing demands. The trade unions 
will not become anti-capitalistic through the conversion of their members 
to a certain point of view or by the adoption of certain preambles; 
they are that by their very makeup and methods. The most that 
can be done is to clarify their aims and intensify their efforts towards 
freedom. If the trade unions instinctively throw dust in the eyes of 
their enemies, they do it for an altogether worthy purpose, the eleva¬ 
tion of the standard of well-being for the mass of the people. In the 
case of the capitalist class we see the same principle applied to an 
utterly vicious end. 

The question may be pertinently asked, why if camouflage is 
such a potent weapon in social as well as military welfare, should the 
true nature and tendency of the trade unions be pointed out, thus 
stripping the movement of its philosophic protection and leaving it 
bare before its enemies? The answer is that the camouflage works 
both ways; it deceives friends as well as enemies. It has thus to a 
great extent cost the unions the support of the whole left wing of the 
labor movement. Its advantages are outweighed by its disadvant¬ 
ages. 

PROBLEMS 

1. What is the union label and what is its purpose? In which branch of 
industry would you expect it to be more valuable and why: the manu¬ 
facture of overalls or evening clothes; breakfast cereals or pipe tobacco; 
phonographs or boots ? 

2. Should the union label be discussed under the organization of the workers 
in the field of production or under the organization in the field of con¬ 
sumption ? Why ? 

3. What is the boycott ? How did the name originate ? Was the Boston 
Tea Party an instance of boycotting ? Why or why not ? 

4. What is the distinction between a primary boycott, a secondary boy¬ 
cott, and a compound boycott ? What is the general attitude of the 
courts toward each of these practices and why ? 

5. What should the law of the boycott be and why? Work out in detail. 

6. What is a blacklist ? How does it differ from a boycott ? By what 
methods can it be administered ? 

7. What is an injunction and what purposes does it serve? Distinguish 
between a temporary and permanent injunction. Why grant injunc¬ 
tions anyway ? Why not let the injured party sue for damages later ? 

8. Can an injunction be issued to prevent an act which is later adjudged 
legal ? 


678 THE WORKER IN MODERN ECONOMIC SOCIETY 


9. What right of representation has the party enjoined at the granting of a 
temporary injunction; at the hearing on the permanent injunction? 
Comment upon this. 

10. If an injunction is disobeyed, what penalty, by whom, and under what 
conditions, is it inflicted ? 

11. What modifications has it been claimed that the Clayton Act made as 
regards the law of boycotts and of injunctions ? Was it the intent of 
Congress to make these changes ? Justify your position. 

12. Did the Clayton Act apply to cases originating before state courts; 
before federal courts ? 

13. To what extent has the Clayton Act actually changed the law of injunc¬ 
tions and boycotts in practice ? Mr. Gompers has referred to the 
Clayton Act as “Labor’s Magna Charta”; others have referred to it 
as “Labor’s Gold Brick.” Which is more nearly correct? 

14. In the railway shopmen’s strike of 1922, Attorney-General Dougherty 
for the federal government secured an injunction forbidding the leaders 
of the strikers among other things to communicate plans by telephone, 
through the mails, and by word of mouth ? Was this a justifiable use 
of the injunction. 

15. “The purpose of the injunction is to preserve the status quo. If it is not 
made permanent, matters can always be resumed where they were 
before, with no damage done. If damage is done, suit can be instituted 
to recover.” To what extent do injunctions preserve the status quo 
in labor disputes? What are the chances of securing damages if an 
injunction is later dismissed and why ? 

16. Labor disputes in the United States are waged with a violence that is 
unknown in England or on the continent. Can you give any explana¬ 
tion as to why this should be so ? 

17. “The militia are supposed to be ordered out to keep the peace at the 
time of a strike. What they really do is to break the strike.” How 
may this occur ? 

18. Comment on the swearing in of company guards as deputy sheriffs. 
To what abuses does it open the way? 

19. Why do employers use spies among the workers? Do the workers 
ever have spies among the employers? What consequences follow 
from their use ? 

20. Describe and explain the attitude of the typical unionist in the building 
trades toward violence. 

21. Describe and explain the policy of the Typographical Union toward 
admittance to the trade ? What have been the consequences of it ? 

22. The cotton-print designers’ union allows the trade to be taught only to 
sons of members. Explain the reasons for their action. Most plumbers’ 
locals require a period of apprenticeship of five years and permit the 
employer with one workman to have one apprentice and if five workmen, 
two apprentices. Why do the unions impose these requirements ? Do 


UNION POLICIES AND METHODS 


679 


you consider them excessive ? Why ? Would you expect the condi¬ 
tions of entrance into the trade to be more strict among the coal-miners 
or the photo-engravers ? Why ? 

23. Is it justifiable for the ipiions to impose any restrictions upon the 
entrance to a trade ? If not, why not ? If so, why, and are there any 
limits, and what are they, to the restrictions which they should impose ? 

24. “It has been the union restrictions which have caused the decline of 
apprenticeship and which have prevented the American boy from 
learning a trade.” Comment. 

25. The Sherman Act of 1890 declared combinations in restraint of trade to 
be illegal, thus placing on the statutes the opinion of the common law. 
Are unions combinations in restraint of trade ? If so, in what way ? 
If not, why not ? 

26. Why do plumbers’ unions prohibit their members from using bicycles ? 
Why do certain painters’ unions prohibit the using of wide brushes? 

27. “Restriction of output has been introduced by unionism and with the 
crushing of the unions it would disappear.” Do you agree ? 

28. “The chap who works hard to please his employer is a traitor to his 
class, for he is working some other fellow out of a job. The more he 
does, the less there is for the rest of us to do.” Why is this view 
advanced ? Is it correct ? Explain fully. 

29. “It is an erroneous doctrine that makes the workmen restrict output. 
If they would work harder, costs would go down, prices would follow, 
people would purchase more goods, and the workers would still be em¬ 
ployed and would be able to buy more things.” To what extent is this 
true ? Why have not such arguments as these shown the workmen 
why they should not restrict output. 

30. What is a jurisdictional dispute ? Why do the unions engage in them ? 
How are they decided ? How might they be lessened ? 

31. Why have the unions developed mutual insurance? What kinds of 
benefits do they chiefly pay and why ? What effect has it had upon their 
strength and upon their policies ? 

32. Describe the circumstances under which the collective agreement with 
the molders was made. Compare its methods of preventing strikes 
and insuring continuity of production with those followed in the 
men’s clothing industry? Which do you prefer and why? In the 
molder’s experience, would you say the workmen had tried to consider 
the employer’s point of view ? Justify your position. 

33. Why do unions generally try to limit the power of an employer to dis¬ 
charge labor? The International Typographical Union provides that 
men must be laid off according to their length of service. Why was 
this rule passed and what have been its consequences ? Compare 
with the system followed during slack times in the men’s clothing 
industry. 


68 o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


34. “You cannot expect workmen to continue working on the old scale, 
even though the agreement has several years to run, if the cost of living 
keeps moving upward.” Comment. What will be the probable atti¬ 
tude of labor when the cost of living goes down ? 

REFERENCES FOR FURTHER READING 

Beman, L. T. (ed.), The Closed Shop 

Cole, G. D. H., An Introduction to Trade Unionism 

Hoxie, R. F., Scientific Management and Labor 

-, Trade Unionism in the United States 

Laidler, H. W., Boycotts and the Labor Struggle 
McCabe, D. R., The Standard Rate in American Trade Unions 
Marot, Helen, American Labor Unions , chaps, vii-xviii 
Stockton, F. T., The Closed Shop in American Trade Unions 
Webb, S., and B., Industrial Democracy , Parts II and III. (Incomparably 
the best work on the subject.) 

Wolfe, F. E., Conditions of Entrance to American Trade Unions 



CHAPTER XXn 


CONSUMERS CO-OPERATION 

i. THE EARLY HISTORY OF CONSUMERS CO¬ 
OPERATION AND ITS FUNDAMENTAL 

PRINCIPLES 1 

The modern co-operative movement virtually dates from 1843. 
In that year, in Rochdale, a manufacturing town of northern England, 
a group of twenty-eight flannel weavers, who had just gone through 
an unsuccessful strike, met to discuss what they should do. They 
decided to start a co-operative store which would free the workmen 
from the high prices charged by company stores under the credit 
system. Ultimately, they hoped to abolish the wage system and to 
establish “a self-supporting home colony.” The members painfully 
saved twopence a week until each had accumulated a pound, and with 
this scanty capital, amounting in all to only $140, they started a 
store, open only two evenings a week and tended by the members 
themselves. The first week’s sales amounted to only $10. Few 
expected the store to survive while often the members themselves lost 
• heart. Nearly eighty years have elapsed since then, and from this 
apparently insignificant venture has sprung a mighty movement 
with over four and a half million members in Great Britain alone, 
belonging to some 1,400 societies, whose sales to members in 1920 
amounted to one and a quarter billions of dollars. These societies 
in turn owned two gigantic wholesales, the English and the Scottish, 
whose net sales amounted to approximately six hundred and fifty 
million dollars. The amount of capital invested in the retail and 
wholesale societies, practically all of which is owned by the working 
class, amounted to nearly six hundred million dollars. 

What are the principles which have caused this extraordinary 
growth ? They were those originally embodied in the plan of the 
Rochdale pioneers and which have ever since served as the model for 
successful co-operation. 

1. To charge the market price for goods and to sell for cash and 
not for credit. 


1 By Paul H. Douglas. 


681 


682 


THE WORKER IN MODERN ECONOMIC SOCIETY 


2. To pay the holders of stock, the shares of which are low and 
the amount of which can be held by any one member is limited, approxi¬ 
mately the current rate of interest but only that. 

3. To divide the net profits for each quarter, after a small deduc¬ 
tion for educational purposes, among the members in proportion to 
the amount of purchases made and not according to the amount of 
stock held. 

4. To secure democratic control by giving each member only one 
vote irrespective of the amount of stock held. 

The last three of these principles are in direct opposition to those 
which characterize most of our modern business. Under consumers’ 
co-operation, capital is made the servant of industry, being paid 
the current wage but allowed to share in the residual gains of the 
enterprise and no control over the policies and direction of the venture. 
Business becomes an enterprise to benefit those who purchase the 
commodities and to meet mutual needs. In the language of the French 
economist Gide, it aims at “transforming that co-operation which 
already exists in human society into conscious organized co-operation.” 
The average rate of dividends thus returned to the consumer has 
ranged in recent years in Great Britain from 9 to 13 per cent. 

The difference between consumers’ co-operation and other varieties 
of co-operation may be briefly sketched. Producers’ co-operation 
carries with it the ownership and direction of a plant or industry by 
those who are directly engaged in working in it, and it is to this group 
and not to the consumers of the product that the profits go. Seventy 
years ago it was producers’ co-operation and not consumers’ that was 
expected to develop, but, in the main, the former movement has been a 
failure. Co-operative marketing consists generally in the grouping 
together of individual producers to sell their privately owned products 
more effectively. It generally does not carry with it any common 
ownership of the means of production nor any common control over 
production itself. 

2. METHODS OF THE STORE AND THE FEDERATION 1 

It is doubtful whether the Rochdale Co-operators could have 
succeeded if Charles Howarth had failed to introduce the system of 
dividing profits on purchase which resulted in the government of 
the store by the customers; i.e., by the community at large. This 

1 Taken with permission from Beatrice Potter (Mrs. Sidney Webb), The Co-oper¬ 
ative Movement in Great Britain , pp. 62-108. (Longmans, Green & Co., London, 
1891.) 


CONSUMERS CO-OPERATION 


683 


system has many direct and indirect advantages; but it has had one 
peculiar and possibly unforeseen result: it established the co-opera¬ 
tive movement on the firm foundation of pure democracy. 

Why were not the goods sold at cost price, plus the expenses of 
management? This method of fixing prices is impossible in the 
conduct of retail trade. Retailing necessitates the division of goods 
bought in the bulk, at wholesale prices, into small quantities. The 
sale of these small quantities at cost price involves the use of fractions 
not represented in current coin. 

Any attempt to fix prices so that the quarterly stocktaking shall 
show neither profit nor loss is manifestly impracticable. The Roch¬ 
dale Pioneers, partly in order to accumulate capital, partly to avoid 
the enmity of the shopkeepers, accepted the current price of the 
town as a fair standard, insisting only on the genuine quality of the 
goods sold. A surplus between selling prices and cost of production 
was therefore unavoidable, the question remained how to distribute it. 

Now, the “profits” of a business may be paid to three different 
persons: (1) to the owner of capital; (2) to the workers (whether 
brain workers or manual workers); and (3) lastly, to the customers; 
i.e., to the community at large. Thus the Rochdale Pioneers had 
three distinct courses before them. First, they might have paid all 
surplus profits as dividend on the original £28, a method which has 
been since pursued by the middle-class supply associations. Secondly, 
they might have divided their profits in proportion to the labour 
expended by each member in the service of the store: a method 
which would have been, in these early days of the Toad Street Store, 
absolutely equitable, as all members were required, if necessary, to 
act in rotation as shopmen, buyers, and in other official capacities. 
Thirdly, they might adopt the new idea of dividing profits according 
to the purchases of each member. 

Under the first system the prices would be ultimately arranged 
to bring in the utmost profit to the shareholder. It would become a 
question of expediency with a body of shareholders, as it is with the 
individual trader, whether to lower prices in order to extend trade 
or to raise prices in order to increase net profits on articles sold. 

Under the second system, a strictly limited number of individuals 
would be making profit by supplying the needs and controlling the 
expenditure of the general body of consumers, checked only by the 
competition of other traders. There remained, therefore, the third 
way of disposing of the profits of the Toad Street Store—dividing 


68 4 


THE WORKER IN MODERN ECONOMIC SOCIETY 


them as a percentage on the purchases. This was in fact an indirect 
method of realizing the Owenite ideal, and eliminating profit on price; 
for the surplus over cost price, given by the purchaser, was returned 
to him in the form of bonus. 

The origin of this expedient, apparently simple, but pregnant 
with a complete system of democratic industry, is enveloped in 
obscuritv. Without doubt it was the Socialist Charles Howarth who 

J 

suggested it to the Rochdale Pioneers. 

This peculiar method of dividing profits in proportion to purchases 
secured the rights of membership to all customers. Under the 
Rochdale system any man or woman may become a member by the 
payment of is. entrance fee. Though the existing members of a 
society have a legal right to exclude new comers, there is no possible 
inducement under this system to limit the number of members. 
Quite the contrary; under good management, each new member, by 
increasing the trade of the society, adds to the percentage of profit 
on the whole turnover. With the relative decline of fixed charges 
peculiar to a growing trade, with the economy in labour, with the more 
advantageous terms open to large buyers in the wholesale market, 
the percentage of profit on each pound’s worth of goods steadily 
increases as the association grows in numbers. Thus in all well- 
managed stores we witness a fervent desire on the part of officials 
and committeemen to include every inhabitant of the district within 
the charmed circle of profit-sharing and self-governing members. 
No man is too great, no man is too low, no man too rich, no man too 
poor—always supposing that he will buy and pay cash—to be included 
in this all-embracing democracy. Here we have no fixed or limited 
number of individuals (capitalists or workers) assuming the government 
and absorbing the profits, but an ever-growing body of voters. This 
then is the grand achievement of dividend on purchase: it has provided 
a unique democratic foundation to an industrial organization. A 
share in a working-man’s Co-operative Store can never rise above par. 
The increased value of the concern, whether due to the growth of the 
surrounding population, to the exceptional energy and integrity of 
members and officials, or to the heightened power of federated trading 
and federal production—this unearned or unowned increment (in so 
far as present members are concerned), is distributed throughout 
the community to all who care to claim their share by becoming 
members of the society. The healthy democratic instinct of the 
Rochdale pioneers discovered itself anew in their regulations with re- 


CONSUMERS CO-OPERATION 


685 


gard to voting. One man, one vote, and no proxies is a sound doc¬ 
trine of suffrage. Members who are indifferent to, or careless of the 
welfare of the society, are disfranchised by non-attendance. Per¬ 
sons, and not property, form the constitutional basis of the Rochdale 
system. 

Federation .—In the co-operative movement it was the democratic 
constitution of the store which alone secured to the federal principle 
a fair start. A society governed by a close body of workers or share¬ 
holders would be more than human if they instructed their competitors 
in the art of buying and selling. But with the government of the store 
by the customers each society is as willing to teach as it is anxious 
to learn. Emulation among the officials of different stores replaces 
the equally natural desire of profit-makers to keep all special informa¬ 
tion for their own use. 

The first conference of the representatives of these miniature 
democracies was convened by the Pioneers in the early part of 1850. 
Gradually with the rise of stores in other districts, the habit of discus¬ 
sion, with the desire for joint action, spread. The plans discussed 
may be classed under four headings; (1) Federal institutions for 
wholesale buying and manufacturing. (2) The technique of shop¬ 
keeping. (3) Propaganda in unconverted districts. Out of these 
discussions arose, in the first instance, the various minor federations, 
and in the second place the English Wholesale Society. In 1868 
Scotch Co-operators followed suit with the Scottish Wholesale Society. 
To-day these two sister institutions include as members the vast 
majority of distributive stores within the United Kingdom. The 
propagandist and political work of the Conference Committees 
culminated in the institution in 1869 of the Co-operative Union. 

Thus the work of the district conferences branched off into two 
different channels: the development of co-operative trade and manu¬ 
facture in the two great wholesale societies on the one hand, and the 
political and propagandist action of Co-operators embodied in the 
Co-operative union on the other. 

In both the English and the Scottish Wholesale, the central 
institute is owned and governed by shareholding societies and profits 
are distributed among the member societies according to the purchase 
made. Both societies are prohibited from selling in the open market. 
In trading with non-members, the wholesale societies would be 
extracting profit from fellow-countrymen who have no share in the 
government of the concern, and might be transformed into a close 
body of shareholders. 


686 


THE WORKER IN MODERN ECONOMIC SOCIETY 


3. THE PLACE OF THE WHOLESALE 1 

The local co-operative societies soon felt the need of a central 
agency which would remove the adverse discrimination practiced 
against them by the private wholesalers and give to them the advan¬ 
tages of large-scale purchasing with __ an attendant elimination of 
private profit. What is now the English Co-operative Wholesale 
Society was accordingly formed in 1863 and five years later the Scot¬ 
tish wholesale. In the early days, there was a great deal of jealousy 
of the wholesales upon the part of the managers of the local co¬ 
operative stores who felt that their powers were being limited and this 
caused many societies to be slow in affiliating with the Wholesale. 
While this feeling has not wholly abated even now, practically all the 
societies are at present members. 

The structures of the wholesales are similar to those of the retail 
stores. Membership is open only to co-operative societies who 
purchase stock according to their membership and who receive 
“dividends” in proportion to their purchases. Each society has one 
vote, and additional votes according to the amount purchased. 

The wholesales furnish the local stores with approximately 
five-eighths of all that the latter sell; the net sales of the C.W.S. 
amounting, in 1920, to $625,000,000. The wholesales also manu¬ 
facture goods in addition to purchasing them from others, producing 
in 1920, over $165,000,000 of the goods they sold and employing 
some 36,000 workers in their manufacturing processes. The Co¬ 
operative Wholesale Society owns large flourmills, and soap, jam, 
biscuit, clothing, and shoe factories. It owns tea plantations in India 
and Ceylon amounting to some 40,000 acres, wheat fields in Canada, 
oil properties in Africa, a tallow factory in Australia and six estates 
in England where it raises strawberries and tomatoes. It carries on 
an extensive banking business for trade unions, co-operative societies 
and recommended individuals—the total deposits and withdrawals 
amounting to approximately three and a quarter billion of dollars in 
1920. The banking profits are divided among their customers— 
whether borrowers or lenders. The wholesale also conducts a large 
insurance business and, among other features, sells group life insurance 
to local societies for all their members, and some 2,700,000 co-operators 
are insured in this fashion. In addition, it furnishes local societies 
with assistance in selecting the best goods and sends expert auditors 
and stocktakers to them when the local groups want assistance. It 

1 By Paul H. Douglas. 


CONSUMERS CO-OPERATION 687 

also reorganizes local groups that fail and tries to put them on their 
feet again. 

All factories and other productive enterprises are managed by the 
wholesales and not by the immediate workers concerned. The 
wholesales are in turn managed by full-time boards of directors chosen 
by the member societies and receiving relatively low salaries. In 
England their salaries have recently been raised to $4,500 but William 
Maxwell, long the able president of the Scottish wholesale, received 
only $1,500. 

The advantages which the wholesalers afford to the local societies 
have been lucidly pointed out by Professor Gide to be the following: 
(1) They enable the local stores to secure goods cheaply because the 
wholesale purchases in large quantities. (2) They enable small 
societies to get started by means of furnishing both goods on demand 
and expert advice. (3) They obviate, in so far as their goods are 
concerned, the danger of private producers bribing the local store 
managers to purchase specific lines of goods. (4) They prevent 
boycotting by private wholesalers and manufacturers. (5) They 
alone make consumer ownership of manufacturing possible. (6) They 
furnish miscellaneous services which could not be provided by the 
local stores. 

4. ECONOMIC ASPECTS OF CONSUMERS 
CO-OPERATION 

a) ADVANTAGES 1 

Can the co-operative store realise any economies of business 
organization, which are impossible to the non-co-operative establish¬ 
ment ? In the department of retail distribution, ves. 

The private shopkeeper can only guess at the wants of his 
customers; he cannot formally assure himself of the continuance of 
their custom by any honorable method, though he may of course 
bind them by getting them into his debt. Hence he must allow a 
margin for the risk of unsold goods or goods sold at a loss, and he must 
spend very considerable sums in show and advertisement to attract 
a voluntary custom. The co-operative store on the other hand, 
if its members are loyal and inform the store of their wants, possesses 
a knowledge that such and such goods are required and a guarantee 
that these will be taken. It has less risk of unsold goods, and smaller 

1 Taken with permission from C. R. Fay, Co-operation at Home and Abroad , 
p. 311. (P. S. King & Son, Ltd., 1908.) 


688 


THE WORKER IN MODERN ECONOMIC SOCIETY 


expenses of window-dressing and advertisement. The members come 
because it is their store. 

Furthermore, the store has an advantage of another kind, which is 
usually expressed in the phrase “the consumers become their own 
shopkeepers.” The members of the store take over personally 
certain of the necessary functions of the shopkeeper. The store 
avoids certain expenses for which the independent shopkeeper must 
recoup himself in the price of his wares. It does not however dispense 
with the corresponding duties. But it spreads these duties among 
its members. 

h) SALE AT MARKET PRICE 1 

Sale at market price has the following advantage: 

First, for a purely business reason. Even if sale at cost price 
were aimed at, this would in practice be a trifle higher than the cost 
of production or the price paid to the wholesale merchant, as the case 
may be, for the division and cutting up of goods for retail consump¬ 
tion entail a certain amount of waste which it is not easy to estimate 
in advance. It depends on very irregular circumstances, occasional 
unskilfulness in carriage and sale, changes in the weather, the discovery 
of defects not apparent in the wholesale condition, the distaste of 
customers for a particular piece of a particular commodity, and so 
forth—so that the estimation of an average charge under this head 
would be peculiarly liable to error; and if the error were much on the 
wrong side, it might be necessary to make a call on the purchasers 
for a further payment, which would certainly cause difficulty and 
irritation. 

Secondly, for a psychological reason. By selling at market price 
and accumulating the surplus at the end of the year, the store, so to 
speak “bulks” its advantages. A mere sixpence seems to the working 
man and indeed to most people a very petty affair; but accumulated 
to a sovereign at the end of a year, it is a sum worth the having. 
This mental habit is fairly utilised by the store, when, temporarily 
postponing the demonstration of its superiority over the private 
retail, it ranges itself under a price-list fixed by him, and then sub¬ 
sequently by its dividend impresses on its customers in a striking and 
definite manner the financial benefit which it confers. 

In addition, sale at market price avoids friction with the shop¬ 
keepers. As Mr. G. J. Holyoake observes of the cost price policy 

1 Adapted with permission from C. R. Fay, Co-operation at Home and Abroad , 
pp. 318-19. (P. S. King & Son, Ltd., 1908.) 


CONSUMERS CO-OPERATION 


689 


of the Leeds Flour Society in its early days: “Under the policy of 
cheapness, the store enters into competition with the tradesman and 
is a continual irritation to him: whereas stores which keep to the 
average price benefit the shopkeeper, who can obtain better prices 
for his commodities, since no customer can say he ‘can get things 
cheaper at the co-operative store.’” 

5. CONSUMERS CO-OPERATION ON 
THE CONTINENT 

a) A STATEMENT BY COUNTRIES 1 

1. Belgium .—In every country except Belgium the Rochdale 
type has been more or less faithfully copied. The characteristic 
feature of Belgian cooperation, dating from 1880, is that it is mixed 
up with politics. The socialist party has made the cooperative 
store not merely a fortress whereby to bombard the capitalist society 
with potatoes and 41b. loaves, but a club house for the people for 
meetings, instruction, recreation, improvement. It has made coopera¬ 
tion a sort of patronage. The workman willingly allows himself to 
be drawn into a net-work of schemes of insurance, providence and 
mutual aid, which surrounds him completely from his birth to his 
death. He is taught how to vote properly and not to drink alcohol. 
It is in order to keep in daily touch with him and to be able to control 
his actions more minutely that all Belgian cooperative societies 
make the selling of bread the basis of their operations. A large part 
of the profits are used for educational and propaganda work. 

2. France .—Cooperation in France progressed slowly after the 
early failure of their producers’ societies, and in the nineties was further 
weakened by a split between the Socialist and the “bourgeois” wing. 
A partial union was established just before the war. 

3. Germany .—In Germany the cooperative movement was first 
started under Schulze Delitzsch about 1850 in the form of cooperative 
credit, and in this form it has had a wonderful development, more 
striking even than that of consumers’ cooperation in England. There 
are, in fact, 20,000 cooperative credit societies, both rural and urban. 

As cooperative credit is the most conservative of all forms of 
cooperation it has rallied together the liberal and the bourgeois parties, 
and even the small traders, who have gained great advantages 
therefrom. It was a sort of lightning conductor for quite a long time, 

1 Adapted with permission from Charles Gide, Consumers’ Cooperative 
Societies (Eng. transl.), pp. 20-26. (T. Fisher Unwin, 1920.) 


690 THE WORKER IN MODERN ECONOMIC SOCIETY 


a preventive against the extreme socialism of Lasalle and Marx. 
The distributive societies remained in a secondary position, their 
only function being (in the opinion of the Union) to help the workman 
to save and be a source of supply for the credit societies. About 
1900, however, the distributive societies began to rebel, and in 1902 
formed their own independent Union, since when their growth has 
been enormous. 

b ) PRESENT STATUS OP CO-OPERATION IN EUROPE 1 

TABLE XCI 

Membership in Consumers’ Co-operative Societies 
in Europe (Partial List) in 1914 and in 1918 
(or Thereabout) 


Country 

1914 

1918 

Proportion of 
Members per 1,000 
Inhabitants* 

Number of Members 

Number of Members 

British Isles . 

264 

I 21 

34 

90 

43 

290 

120 

70 

350 

90 

3,054,000 

2,000,000 

I,5OO,OOO, 
881,000 
400,000 
276,000 
97,000 
423,000 
250,000 

I70,000 

/3,846,000 

14,131,000(1919) 

4,OOO,000 

I2,OOO,OOO 

I,800,OOO 

500,OOO 

354,000 

201,000 

? 

? 

? 

Germany . 

Russia . 

France . 

Italy. 

Switzerland. 

Finland. 

Austria. 

Denmark. 

Belgium. 



* The number of cooperators per 1,000 inhabitants is multiplied by four because each cooperator 
stands for a family, sometimes a very large family; there is very rarely more than one member of the 
same family. 


The high place the small countries—Denmark, Switzerland, and 
Finland—take in this classification is worthy of remark. 

The increase in the neutral countries can be explained by the fact 
that cooperative societies have shared in a general prosperity. But in 
the belligerent countries, those who remained at home increased 
their consumption on account of the increase in wages and allowances, 
and further, the number of members of the societies has increased, 
because the general raising of prices has forced the public towards 
cooperation. It is possible, however, that these increases will not be 
permanent. 

1 Adapted with permission from Charles Gide, Consumers’ Cooperative Socie¬ 
ties (Eng. transl.), pp. 30-40. (T. Fisher Unwin, London, 1920.) 
























CONSUMERS CO-OPERATION 


691 


The principal cooperative countries advance at very different 
speeds along the road to cooperation. First of all, the United King¬ 
dom excels by the number of its cooperators—more than four million 
families, which represents about one-third of the population of Great 
Britain, leaving out Ireland, where consumers’ cooperation is of little 
account. There are certain counties where the proportion of coopera¬ 
tors rises to a half and even three-quarters of the population. 

All the societies are strong, for their average membership (1914) 
is over 2,200 (290 in France) while their average sales per member 
is over twice that of France. 

Germany, as we have said, is above all the home of cooperative 
credit societies, though it made great strides in the years before 
the war, at a rate of progress much higher than that of Great 
Britain. Breslau has the biggest society in the world with 100,000 
members. 

The average of sales per member is much smaller in Germany 
than in Great Britain, but this is explained less by disloyalty of 
members than by the fact that these societies confine their trade to 
groceries. 

France, as we have already seen, comes first after Russia as 
regards the number of its societies, but there is nothing for her to 
boast about in this, as the large number of societies is not a sign of 
strength, but of weakness; it is simply a sign of the scattered and 
overlapping nature of the societies. 

Switzerland takes a high place among the cooperative countries, 
for it has 78 cooperators per 1,000 inhabitants as compared with 
Britain’s 74. 

Belgium is the only country where the cooperative movement 
has taken a decidedly original form and a socialist and political 
colour. 

In Russia development of cooperation was very slow until the 
first years of this century, but during the last ten years it has made 
great strides, and the war has given it an unexpected impetus. Doubt¬ 
less the Mir and the Artels had already shown the innate aptitude of 
the Russian people for association. It is therefore not surprising 
that as these antiquated forms disappear the spirit of association 
should manifest itself in a new form. The democratic movement 
here finds an outlet while the special progress due to the war is 
explained by the necessity of struggling against the increase of prices. 


692 


THE WORKER IN MODERN ECONOMIC SOCIETY 


6. THE STATUS OF CONSUMERS CO-OPERATION 
IN THE UNITED STATES IN 1920 1 

The United States Bureau of Labor Statistics conducted an 
investigation of consumers cooperation in 1920 and found some 2,600 
societies to be in existence. Only 1,009, however, furnished data of 
whom only 828 were exclusively consumers cooperatives while the 
remainder were mixed societies combining both cooperative marketing 
and purchasing. Eight hundred and seven or 80 per cent of the total, 
were conducted strictly according to Rochdale principles. The mem¬ 
bership in the societies that reported was slightly over 260,000. 
If the other 1,600 societies had an equal average membership, the 
total number of cooperative members would have been nearly 700,000. 
About a third of the societies had less than 100 members and, approxi¬ 
mately another third had between 100 and 200. There were five 
consumers societies however that had more than 5,000 members. 

The societies were almost overwhelmingly located either in the 
country or in the smaller towns and cities. Few have found foothold 
in the larger centers of population. Most of the societies have not 
been running long, more than 40 per cent of the consumers’ societies 
having been formed within two years and more than 70 per cent within 
five. Approximately a seventh, however, had been operating for more 
than ten years and some 3 per cent for more than twenty-five years. 

Six hundred and fifty consumers’ societies sold sixty-five million 
dollars worth of goods or an average of $100,000 per society and of 
$353 P er m ember. One hundred and sixty-one mixed societies sold 
approximately fifteen million dollars worth of goods or an average of 
something over $95,000 per society and of $378 per member. Making 
equal allowance for the known societies that did not report, we would 
have an estimate of total sales of 258 million dollars. 

Approximately eighty per cent of the stores that reported had 
earned a profit during the preceding year, averaging 3.6 per cent of the 
gross sales. After deducting the losses of the remaining twenty 
per cent, the net profits for all the stores reporting amounted to 2.4 
per cent. The operating expenses were found to be somewhat lower 
than those shown for private grocery stores by the Harvard Bureau 
of Business Research. 

The shares of stock in the exclusively consumers’ societies were 
found to be generally from $5 to $10 a share with the usual provision 

1 Adapted with permission from Florence E. Parker, “Consumers Cooperative 
Societies in the United States in 1920,” Bulletin jij, U.S. Bureau of Labor Statistics. 


CONSUMERS CO-OPERATION 693 

however that a member must subscribe to more than one share. The 
minimum investment permitted indeed averaged $47. 

[Note: The co-operative movement is especially strong among the 
Finns and the coal miners of Illinois and Pennsylvania. The move¬ 
ment has suffered from many fraudulent co-operative concerns which 
have been devised to sell stock rather than give service. One such com¬ 
pany, although violating every principle of the Rochdale system, 
sold over $28,000,000 of stock in two years.—E d.] 

7. SOME REASONS FOR THE PAST FAILURE OF 
CO-OPERATION IN THE UNITED STATES 1 

Of 56 societies that have dissolved within the past fifteen years 
the stated causes of failure are surprisingly similar. The testimony 
tersely given by former managers or secretaries is thoroughly instruc¬ 
tive. For example, the half-illiterate manager of a small New 
Hampshire society which failed in 1907 wrote: “The hole cause of 
it going under they would not corprate and small capital.” The 
secretary of another society of the same state wrote: “The association 
went up for the reason that its members could not be taught 
co-operation and its value in the future.” A Connecticut society 
wrote: “The company went into bankruptcy for the reason that its 
members, 136 in number, did not sustain the store and the manage¬ 
ment had to rely on outside trade, and not being able to collect from 
members, times being hard, the result as above.” The secretary of a 
Maine society wrote: “There is something lacking, they cannot make 
one run in Maine. I think the most trouble is they do not get a man 
who is used to buying and is honest to run them.” 

These four letters contain the essence of the causes of failure 
usually ascribed: bad management, extended ciedit, dishonesty, 
ignorance of business, small capital, and most of all, the ignorance 
and disloyalty of members. Closer examination shows that these 
causes may be reduced to two of which all others are but phases—bad 
management and lack of co-operation. 

The basic errors in management include ill-chosen location 
(not central) and ill-composed membership (mixed races or employes 
of different trades unable to work harmoniously). More important, 
however, are errors in the administration of the business of the societies. 
Business difficulties leading to failure are usually the result of a 

1 Taken with permission from James Ford, Co-operation in New England • 
(Published by Survey Associates, Inc., 1913. Copyright, 1913, by the Russell Sage 
Foundation.) 


694 THE WORKER IN MODERN ECONOMIC SOCIETY 

management that is either inexperienced, tactless, or dishonest on the 
one hand, or self-centered, subverting co-operation by what one 
ardent New England co-operator calls “one-man powerism” on the 
other. Yet the faults of the manager are the faults of the society he 
represents. If a society fails through the machinations of its manager, 
co-operation has in that instance proved itself inadequate; the 
members who were victimized chose the manager and are in so far 
responsible for the resultant failure. 

Co-operative societies not only fail from unwise selection of officials 
but also they may try to save money by paying their manager too 
small a salary. Thus one of New England’s largest co-operative 
stores pays its manager only $21 a week, which is much less than his 
service would command elsewhere. If the manager is full of 
co-operative idealism he may accept the low salary and stay at a 
sacrifice, but otherwise, especially if he has business initiative, he 
may seek a more lucrative position elsewhere. Change results in 
instability of management, with consequent loss inevitable upon 
readjustment. 

An outside cause of business failure is competition which steals 
trade. But neither the bargain sale nor the boycott can materially 
harm a co-operative society unless there is disloyalty on the part of 
members, who are willing to abandon a society that embodies their 
hopes in the pursuit of a momentary gain. 

8 . THE POSITION OF THE EMPLOYEES IN THE BRITISH 

CO-OPERATIVE MOVEMENT 1 

This question resolves itself into two separate issues: What are 
the material conditions enjoyed by the 100,000 salaried officials and 
manual workers engaged in the Stores and the Wholesale Societies 
and their productive establishments, and what is their relationship 
with their direct employers, the working-class population of some 
twelve millions included in the co-operative membership? Let us 
first take the wages, hours and other conditions of employment. 

The first remarkable characteristic of employment in the 
Co-operative Movement compared with that of capitalist enterprise 
is the relatively low payment to managing ability, and “brainwork” 
generally, compared with the wages afforded to manual workers. 
The highest salary in the whole Co-operative movement, and this 

1 Adapted with permission from Sidney and Beatrice Webb, The Co-operative 
Movement, pp. n-13. (Fabian Research Report Supplement to the New 
Statesman, Vol. Ill, No. 60, 1914.) 


CONSUMERS CO-OPERATION 


695 


quite an exceptional case, is 1,200 pounds a year. The salaries of 
the heads of the Wholesale departments, who must have great tech¬ 
nical knowledge, range from 400 pounds to 800 pounds; and these fig¬ 
ures represent also the salaries offered to the General Managers of 
the largest stores selling a half a million pounds worth of goods an¬ 
nually. The usual salary for a General Manager of a medium-sized 
store is 4 pounds or 5 pounds a week. 

Turning now to the shop assistants, clerks and warehousemen, 
etc., we find that, with some unfortunate exceptions, the hours of 
labour in the co-operative establishments are habitually shorter 
than those in the capitalist shops and warehouses, the allowance of 
holidays is more liberal, the treatment in sickness is more humane, 
there is much greater security of tenure, and there is on the whole 
more consideration shown. But, as perhaps might have been expected 
from the existence of keen commercial competition between shops 
and stores, the difference is not very great. It is perhaps even less 
with regard to wages than with regard to the other conditions of 
employment. The men and women employed in the different 
co-operative stores often seem to be getting just the same wages as 
those of equal grade and skill in the local shops. 

The manufacturing departments allow of more exact comparison 
between co-operative and capitalistic employment. So far as trade 
union membership extends, the co-operative establishments pay the 
currently-accepted local Standard Rate. Co-operators not unreason¬ 
ably object to the demands that are from time to time inconsiderately 
made, on behalf of their operatives, for the payment of higher wages 
or the concession of better terms than the trade union is able to enforce 
on the capitalists with whom the co-operators have to compete. 

Speaking generally, the employees of co-operative societies are, 
so far as wages and hours of labour are concerned, in much the same 
position as they would be under employers on a large scale—we may 
even add, as regards continuity of employment, amenity of work 
and general consideration, in the position that they would be under 
the best employers in their respective trades. The greatest admirers 
and defenders of the Movement can make for it no higher claim. 
To put it shortly, whatever economic gain is made by Co-operation 
goes, not to the employee as an employee, but to the consumer as 
consumer (the employees being included among consumers). 

But when the Co-operative Wholesale Society started, in 1872, its 
own “productive” departments, the question was raised as to the 
position of the operative bootmakers and biscuit makers who are 


696 THE WORKER IN MODERN ECONOMIC SOCIETY 

% 

taken on. The middle class idealists, then influential in the move¬ 
ment, who had joined the Co-operative Movement in order to promote 
the ideal of “self-employment,” demanded, for the manual working 
wage-earners who were employed in this “production for use,” at 
least a “share of the profits” of the concern. The battle—in which 
the employees themselves took practically no part—was really the 
old conflict between two rival conceptions of industrial organization— 
between the idea of manufacture organized by groups of producers, 
for exchange to the rest of the world (production, therefore, for “profit,” 
in which the manual workers could plausibly claim some share as 
against the capitalist proprietors); and the idea of manufacture 
organized by the whole democracy of consumers, for themselves 
(production, therefore, for use , in which there could be no “profit” 
to share). In the end it became apparent to the mass of co-operators, 
apart from any theory, that it was simply not practicable to give to 
the heterogeneous workers in each manufacturing department of 
the wholesale anything really corresponding to a “share in the profits” 
of their own particular industry, and that, in fact, as the products 
were not sold on the market, but merely transferred to other depart¬ 
ments at an arbitrary valuation, no such “profits” could really be 
ascertained or calculated with any exactitude. To give to all the 
employees of the Co-operative Wholesale Society, whether “pro¬ 
ductive,” or “distributive,” a share in the “profits” of the concern as 
a whole—dependent as these are, in the main, on chances of the mar¬ 
ket unconnected with the zeal or efficiency of the operatives—ap¬ 
peared to the English co-operators to offer no advantages; and to 
amount, in fact, only to a varying and uncertain bonus, in addition 
to wages. The directors of the Scottish Co-operative Wholesale So¬ 
ciety decided to give such a bonus on wages, and a few of the stores 
have followed their example; without, as far as can be detected, any 
appreciable results. 

But to the employees mere membership in the Co-operative Move¬ 
ment is illusory as a method of protection from sweating or personal 
oppression. The man standing at the machine which stamps soap at 
Irlam, or the woman packing jellies at Silvertown, can hardly hope to 
influence, through the members’ meeting of his local society and the 
committee that he may help to elect, the Quarterly Meeting of delegates 
from co-operative committees all over the Kingdom which is assumed 
to control the Executive of the Co-operative Wholesale Society. 

We see, therefore, that there is nothing in co-operative employment 
to prevent the same disputes arising as in capitalist industry. Some- 



CONSUMERS CO-OPERATION 


697 

times it is the rate of wages (usually the interpretation of the Standard 
Rate on a piecework basis) that is complained of, less often the hours 
of labour. There have been the same occasional outbursts of resent¬ 
ment at the discharge of particular employees (“victimisation”), or 
at the incivility of a particular foreman. We have even the same 
attitude—the objection to any interference with “management” or 
“discipline”—taken up instinctively by co-operative as by other 
employers. Thus, there has not infrequently been industrial conflict 
in co-operative establishments as in others. These strikes have 
neither been numerous, nor prolonged, nor embittered, and they 
have always been settled without leaving any permanent soreness 
between the management and the particular employees, or the Trade 
Union that had intervened. But to prevent the scandal of these 
small but recurring disputes, between the wage-earners organized 
as consumers and the wage-earners organized as producers, a Joint 
Committee of the Trade Union Congress and the Co-operative Union 
has been established. 

[Note: Since this was written an aggressive union of some 90,000 
co-operative employees has arisen. By carrying on agitation within the 
ranks of the co-operative societies and by the ready use of the strike 
they have succeeded in raising wages appreciably above the subsist¬ 
ence level and much in excess of those prevailing in other shops. 
Hours also have been reduced to a much lower point than in other 
retail stores. Along with this, however, the union of co-operative 
employees demanded “joint control” of the whole movement whereby 
employees and consumers would jointly share the management and 
presumably the profits. The retail stores bargain collectively with 
this union but have not of course granted any control to the workers 
as such. There is an increasing tendency, however, to remove some 
of the disabilities concerning voting and holding office which have been 
imposed upon employees who are also members. The English 
wholesale, while granting the union scale of wages, refuses to deal 
with this particular union as such.— Ed.] 

9. THE FUTURE OF CO-OPERATION 1 

We see from the foregoing survey of the Co-operative Movement 
throughout the world that, unlike the Associations of Producers, 
the Associations of Consumers afford, at any rate, a real and practic- 

1 Adapted with permission from The New Statesman, III, No. 60 (May 30, 
1914, Special Supplement), 25-33. (Published by the Statesman Publishing Co., 
Ltd., London, 1914.) 


698 THE WORKER IN MODERN ECONOMIC SOCIETY 


able alternative to capitalist ownership as a means of organizing and 
controlling industry. 

1. A genuine alternative. —The organisation of industry by Associa¬ 
tions of Consumers offers, as far as it goes, a genuine alternative to 
capitalist ownership, because it supersedes the capitalist owner, 
whether individual or joint-stock, alike in the control of the instru¬ 
ments of production by which the community lives, and in the absorp¬ 
tion of the profits, which otherwise support a capitalist class. The 
ownership and control are vested in, and the profits are distributed 
among, the whole community of consumers, irrespective of their 
individual wealth. The Co-operative Movement has, without 
divorcing them from their fellows, given to thousands of the manual 
workers both administrative experience and a well-grounded self- 
confidence; and has thus enabled them to take a fuller part in political 
and social life than would otherwise have been possible. It may seem 
as if the co-operators had but to extend their recruiting to the whole 
population, and supply their successful democracy to every branch 
of industry, for the economic problems of society to be completely 
solved. Closer inspection, however, reveals narrower limits to the 
potentialities of the voluntary Associations of Consumers, and brings 
to light imperfections and drawbacks, even dangers and possible 
evils. 

2. Shortcomings. —We shall first deal with shortcomings and 
defects which appear to be temporary and remediable, and after¬ 
wards we shall point out what seems to us permanent drawbacks 
and essential limitations. 

One of the complaints made against the British co-operators in 
particular is what has been called “dividend-hunting.” This outcry 
appears to us to have arisen largely from a confusion of terminology. 
Dividend in a capitalist company means tribute. Dividend in a 
co-operative society is not tribute, but merely a rebate or discount. 
What is open to criticism in the Co-operative Societies of Great 
Britain, in comparison with the leading Belgian societies, is the 
extremely individualistic attitude taken by the members in the 
matter of the disposition of the common surplus, out ot which the 
dividend is paid. The vast majority of British co-operators habitually 
take it for granted that the whole of this surplus ought, as a matter 
of course, to be distributed among the members, and thus transformed 
from common property to individual property. It is true that nearly all 
British co-operative societies devote per cent to “ Education.” But 


CONSUMERS CO-OPERATION 


699 


it does not seem to have dawned on the average British co-operator 
that there would be advantages in retaining part of the surplus for 
other common purposes. It was by no means the smallest advantage 
of the mediaeval gilds that they were, in the fullest sense, fraternities 
having a certain amount of property in common. All the members 
of a. co-operative society, like those of a gild, are exposed to the 
common contingencies of life—why should there not be much more 
co-operative provision made? We have in the British Co-operative 
Movement little of the spirit which makes the larger Belgian societies 
systematically provide, as a matter of course, free bread and groceries 
for their members when sick, or at childbirth, or when the bread¬ 
winner is unemployed; or the gratuitous services of the Society’s 
own medical and nursing staff, or old-age pensions. 

3. Permanent Drawbacks: u Government from above” and u Bureau¬ 
cracy.” —We come now to a feature of the organisation of industry 
by Associations of Consumers—a feature the universality of which 
compels us to infer that it is a necessary accompaniment—which 
co-operative administrators believe to be essential to efficiency, but 
which idealist critics regard as a confession of failure. To the 
employees of an Association of Consumers, its administration is 
like that of any capitalist enterprise, “ Government from Above.” 

The fundamental principle of the Co-operative Movement is 
ownership and control by the whole body of consumers. It follows 
that the men and women who serve behind the counter of the 
co-operative store, or bake or sew in its workshops and bakeries, or 
those who manufacture in the “productive” departments of the 
Wholesale Society, or work on its farms, do not themselves control 
the particular industries by which they live, or obtain for themselves 
the product of their particular labours. In this respect, in fact, the 
Co-operative Society is diametrically opposed to the ideal “Self- 
governing Workshop.” 

4. Limitations .—We now come to the limitations set to the 
expansion of Co-operative Associations of Consumers. With all its 
wonderful success the membership of the Co-operative Movement 
extends, at present, only to a fraction of the population and industry 
of any country. Only in a very few parts of England and Scotland, 
and a still smaller number of districts in Germany, Denmark and 
Switzerland, can we estimate that any large majority of the whole 
wage-eaining class are in the co-operative ranks. Even in Belgium 
and Italy, still more in France and the rest of Europe, the co-operators 


700 


THE WORKER IN MODERN ECONOMIC SOCIETY 


form as yet only a select minority of the whole proletariat. Moreover, 
those who have joined are far from being loyal to the store. They 
resort to it only for some of their purchases. The co-operative 
societies, indeed, only in a few places supply all the needs of a working- 
class household. The bulk of those in France and Belgium have not 
yet become general stores. 

Thus, there is still room for an enormous development in every 
country before the whole wage-earning population of Western Europe 
can be brought to spend, as is done in not a few villages in Northumber¬ 
land, and Durham, an average of more than a pound per week per 
family at the co-operative store. There is room here, on the lines 
of proved success, for co-operation to grow to several times its present 
stature. 

But even such a prodigious expansion would still leave large 
parts of industry untouched. Predictions are notoriously hazardous, 
but it seems to us that there are certain sections of the nation’s 
industry that voluntary Associations of Consumers are, by their 
very nature, never likely to undertake. 

a) The Excluded Classes and Races: The Co-operative Movement 
fails, as at present organised, to extend its advantages to the very 
poorest, by whom such advantages are most needed. After seventy 
years of propaganda nowhere do we find any large proportion of the 
“submerged tenth” of our civilisation included in co-operative 
membership. In a sense, it seems, this is inevitable so long as extremes 
of wealth and poverty exist. In the British cities, for instance, as 
elsewhere, a large proportion of the exiguous incomes of the very 
poorest will never be spent in the co-operative store, for the reason 
that these incomes do not suffice to buy new things at all. A large 
section of the poor use the cast-off clothes, hats and boots of wealthier 
classes, which come to them partly by gift and principally through 
grade after grade of secondhand dealers. Similarly, there is in all 
large cities, a very large sale of ends and remnants of meat and fish, 
broken pieces of bread and waste food of all kinds, to buy which, at 
infinitesimally small prices, members of the poorest families walk 
for miles. The only remedy for this practical exclusion from the 
advantages of the co-operative society is such a universal enforcement 
by law of a prescribed minimum wage as shall prevent the existence 
of so poor a class, along with such a raising of their standard as will 
make them resent dependence on such resources; and, on the other 
hand, such taxation and such an improved training of the wealthier 
classes as will cure them of waste. 


CONSUMERS CO-OPERATION 


701 


Just as there is a class too poor for co-operation, so there is a class 
too rich. So long as anything like the present inequalities of income 
endure, the wealthier part of the population is never likely voluntarily 
to join the ranks of the working-class Co-operative Movement. And 
when we realise that, alike in the United Kingdom and the United 
States, in France and Germany, and in all countries of advanced 
industrialism, something like one-half of the annual income or wealth 
production is at present taken by the comparatively small upper and 
middle class—which do not together amount to more than one-tenth 
or one-eighth of the whole population—we have regretfully to conclude 
that only a tiny fraction of the industry resulting in this half of the 
national product can, so long as we allow it to be enjoyed by a small 
part of the community, ever be brought under co-operative control. 
We must, indeed, infer, from all past experience, that the business of 
Voluntary Associations of Consumers is not likely to go far beyond 
the articles consumed by that portion of the wage-earning class 
enjoying fairly regular employment and wages, together with that 
portion of the population standing immediately above them in the 
present social scale, the large “black-coated proletariat,” to whom 
the means of automatic saving afforded by the dividend on purchases 
makes a direct appeal. It is fortunate that it is just these classes, 
extending from the unskilled laborer to the minor professionals, with 
incomes from 50 pounds to 400 pounds a year, that seem likely to form 
the increasing element in the social order of the next half-century. 

b) The Industries in Which the Actual Consumers Form an 
Unfit Unit of Government: It is even more plain, as soon as we give 
the matter a thought, that the Voluntary Associations of Consumers 
cannot be made the basis of the government of those industries and 
services in which the consumers are a perpetually shifting, hetero¬ 
geneous crowd—as is the case with those who use the railway, tram¬ 
ways, steamship, and omnibus services; with the purchasers of the 
successive editions of the evening newspapers; with the chance 
gatherings which throng the public-houses and the restaurants, 
The case is the same when use or consumption is essentially com¬ 
pulsory, as with the water supply or drainage of a city; or when it 
is found convenient for the service to be supplied gratuitously on a 
communistic basis, as with colleges, schools, libraries, museums, 
parks, and many other municipal services. Moreover, there are 
some services in which the consumers not only form an unfit unit of 
government, but also find it almost necessary to let the service be 
run on a national basis, such as the post-office, telegraph, telephone, 


702 THE WORKER IN MODERN ECONOMIC SOCIETY 

and savings bank; and others, like the railway and steamship service, 
and the mining of coal and iron which are for many reasons not 
likely to be taken out of the control of private capitalism, except by 
and for the state as a whole. The workers in all these industries^ 
who number in the aggregate many millions, must perforce look else¬ 
where than to the voluntary Association of Consumers for any alter¬ 
native to private capitalism. 

Surveying these limitations, we cannot refrain from the inference 
that the business of the Voluntary Associations of Consumers is not 
likely ever to go much beyond the articles consumed by that portion 
of the wage-earning class which enjoys a fairly regular wage and the 
social stratum immediately above the manual working class. Even 
this range must be narrowed by deducting from their expenditures 
the large proportion devoted, on the one hand, to rent, and the cost 
of transportation, and on the other to gambling, theatres and other 
forms of recreation which the Co-operative Movement can hardly 
touch. In order to give definiteness to our suggestion, we hazard 
a statistical estimate. Thus limited, the possible extent of the 
annual trade of the co-operative stores and wholesales in Great 
Britain, if they extended to their utmost, from one end of the country 
to the other, may be put—pending any extensive economic transfor¬ 
mations of society—at something like four to five hundred millions 
sterling, being only one-fifth of the total national production. The 
possible sphere on the Continent is at least as narrowly limited. 

It is therefore to be concluded, with regret, that with regard to 
actually a majority of the workers, and even a large majority, the 
industry in which they are employed cannot by any possibility be 
brought under the control of Voluntary Associations of Consumers. 
The Co-operative Movement, whilst it may help them as consumers, 
affords, in their working lives, no alternative to the Capitalist System. 

PROBLEMS 

1. How can consumers’ co-operatives be regarded as a branch of the labor 
movement ? 

2. What is the difference between consumers’ co-operation, producers’ 
co-operation, co-operative marketing, co-operative banking? Are all 
these related to each other ? If so, how ? 

3. “The consumers’ co-operative society does not differ from any private 
business—it is seeking profits.” Do you agree? If so, why? If not, 
why not ? 

4. What are the economic advantages of co-operative stores over private 
stores ? 


CONSUMERS CO-OPERATION 


703 


5. Which is the preferable method, (a) sale at cost plus allowance for 
overhead, or ( b ) sale at market price with dividend on purchases? 
Why? 

6 . “This is a co-operative concern: we distribute profits in proportion to 
the amount of stock held.” Comment. 

7. It is the custom of many English and Belgian co-operative stores to 
sell goods above the current market price in order to declare large 
dividends. Many co-operators approve of this method. Why do they ? 
Do you believe it is ( a ) desirable, ( b ) advisable ? 

8. A and B are members of a co-operative store which with a capital of 
$50,000 made a net profit of $10,000 on a turnover of $100,000. The 
normal market rate of interest is 6 per cent. A owned $50 worth of 
stock, whereas B owned only $5 worth, but A had purchased during 
the year $200 worth of provisions while B purchased only $20. Allowing 
$1,000 as a proper amount for reinvestment, how would A and B share 
in the remainder (a) if the organization was a joint-stock company, 
(b) if it was organized on the Rochdale basis ? Work out in detail. 

9. Should a co-operative normally sell on credit to its members ? Why or 
why not ? Should it extend credit to a family that is suffering from 
unemployment or illness ? Why ? Should it give credit to workmen 
who are out on strike and therefore cannot pay ? Why ? 

10. Why do the various “army and navy co-operative stores” generally 
sell at cost price rather than at market price ? Is this generally charac¬ 
teristic of co-operative ventures by the middle class ? 

11. Why did the British Wholesale Society decide to sell only to its own 
members? Do you think its decision was wise? Why do the British 
Retail societies sell to the public ? What advantages and disadvantages 
does this entail? What special conditions have the British societies 
adopted as regards this policy ? 

12. Some goods such as sugar, etc., are sold at market price with a very low 
percentage of profit, while others, such as preserves, bring a very high 
profit. Is it fair that X who purchases $10 worth of sugar should 
receive the same amount of profit as Y who purchases $10 worth of 
preserves? Why or why not? What would be likely to happen if 
dividends were distributed on the basis of the profit upon specific 
individual purchases rather than upon the average profit on all 
purchases ? 

13. In the Belgian co-operatives a large proportion of the surplus is not 
distributed among the purchasers but is devoted to educational purposes 
and to socialistic propaganda. Why is this not done in England? 
Would the English system have grown as rapidly had it been practiced ? 
Why or why not ? Is the time ripe for the co-operative movement 
in England to devote a larger proportion to education ? Why ? 

14. What are the advantages in having the individual co-operative societies 
in a given city of very large size? What are the disadvantages? 


7°4 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Would it be better to have more societies with a smaller membership ? 
Why ? 

15. It has been the custom of many co-operative societies in the United 
States to establish wholesale societies and then try to organize branches 
which will serve as retail societies. This has been attacked by others 
who state that the movement should start at the bottom in the formation 
of retail societies and then later build up wholesale. What might be 
the arguments on both sides of this question ? Which of these methods 
do you consider preferable and why ? 

16. Why did the retail co-operatives organize wholesalers? How are these 
governed and how are their profits distributed ? 

17. What has been the effect of co-operation upon the quality of the goods 
sold? 

18. How great have been the savings effected by consumers’ co-operatives ? 

19. What are the distinctive features of Belgian co-operation as contrasted 
with English ? 

20. What proportion of the population of England is served by consumers’ 
co-operatives? In France, Belgium, Germany, Russia, the United 
States ? 

21. How do you account for the world-wide growth of co-operation? For 
the wartime increase ? 

22. Would co-operation have increased as rapidly in England had there 
been chain stores or mail-order houses ? 

23. Why has co-operation been so slow in developing in the United States ? 
To what extent do those difficulties still exist? To what extent can 
they be overcome ? 

24. “The loyalty of the women is essential to the success of the co-operative 
movement.” Why? 

25. “The consumers’ co-operative store is an arm to protect labor in the 
event of struggle.” Explain. 

26. “The co-operative society is especially valuable in training adminis¬ 
trative officers for labor and holding men of talent in the labor move¬ 
ment.” Explain. 

27. What is the status of the employees of co-operative societies, as regards 
(a) wages, ( b ) hours, (c) conditions of work, (d) collective bargaining, 
(e) control over policies ? 

28. To what industries can consumers’ co-operation be applied ? To what 
can it not be applied ? 

29. To what extent is co-operation a solution of the labor problem ? 

30. A number of co-operative projects which have been started in the 
vicinity of Chicago have paid liberal commissions to their organizers. 
Is this good co-operative practice ? Why ? 

31. Investigate the Co-operative Society of America promoted by Mr. 
Harrison Parker and determine whether it was a bona fide co-oper- 


CONSUMERS CO-OPERATION 


7°5 


ative organization. Point out the specific features which it had in 
common with co-operative societies and those in which it differed. 

32. How do you account for the fact that twenty-eight million dollars of 
stock in the Co-operative Society of America was purchased by indi¬ 
viduals ? What does it indicate concerning the popular attitude toward 
our retail market structure ? 

REFERENCES FOR FURTHER READING 

Webb, S. and B., The Consumers Co-operative Movement 
Gide, Charles, Consumers Cooperative Societies 

Potter, Beatrice (Mrs. Webb), Co-operative Movement in Great Britain 

Fay, C. R., Co-operation at Home and Abroad 

Holyoake, G. J., History of the Rochdale Pioneers 

Webb, Catherine, Industrial Co-operation 

Woolf, L. S., Co-operation and the Future of Industry 

Harris, E. P., Co-operation , the Hope of the Consumer 

Reeve, Sydney A., Modern Economic Tendencies 

Redfern, Percy, The Story of the C.W.S. 

Sonnechsen, Albert, Consumers' Co-operation 

United States Bureau of Labor Statistics, Consumers Co-operative Societies 
in the United States in 1920 (.Bulletin 313 ) 


CHAPTER XXIII 
LABOR IN POLITICS 


The labor movement finds expression not only in trades unions 
and co-operative societies, but in political action as well. On the 
continent of Europe, the Socialist party generally acts as the political 
branch of the labor movement. Recent Swedish governments have 
been Socialistic as was the post-war government of Germany; In 
Belgium and Poland the Socialists have been members of coalition 
governments, while in Italy, they are very strong. In addition to this 
certain other countries, such as Russia, are communistic in nature. 

In England, the Labor Party is the strongest party in opposition 
to the present government (1923) with an approximate representation 
of one hundred and forty in the House of Commons. Had the 
members been chosen by proportional representation (i.e., in propor¬ 
tion to the votes cast) the labor representation would be still greater. 

In the United States, the dominant leaders of the American 
Federation of Labor have opposed the formation of a separate labor 
party. There has always been a large group within the American Fed¬ 
eration, however, who have believed in the formation of an independent 
labor party and on many occasions they have sought to have the 
Federation indorse such action. Some of the leaders of this group 
were instrumental in forming the Farmer-Labor Party which was 
organized in 1920. The present chapter is very closely interrelated 
with the subject-matter of Part Seven following. 

1. HISTORY OF BRITISH LABOR IN POLITICS 

a) CHARTISM, TRADE UNIONISM, AND THE RISE OF 
THE BRITISH LABOR PARTY 1 

The essential fact about Chartism is that it was the first great 
movement to be engineered and controlled by workingmen in modern 
times. In its more orderly aspects it did not differ greatly from the 
modern English labor movement, though of course it was dealing 
with unfranchised workers and not with voters. Its ultimate purposes 
were socialistic. But its immediate purposes were political. The 

Adapted with permission from Conyers Read, “Political Progress of the 
English Workingman,” Journal of Political Economy , XXVIII (July, 1920), 606-17. 

706 


LABOR IN POLITICS 


707 


People’s Charter which embodied its program was in brief a demand 
that the workingman should enjoy an equal place in the body politic 
with every other class in the community, that he should be able 
not only to vote but to sit in Parliament. The expectation of its 
leaders was that once the workingman was able to exert his strength 
at the polls, the social revolution would easily and peaceably be 
brought about by due process of law. The demands were briefly 
these: manhood suffrage, vote by ballot, abolition of property qualifica¬ 
tions for membership in Parliament, equal electoral districts, and 
annual parliaments. 

In view of the fact that most of what the Chartists strove for 
has since been achieved it is hard to reproach them with failure. The 
strength of Chartism lay in its protest against social and industrial evils 
which the famous six points scarcely touched. It was political in its 
form but social in its content. Its strength ebbed and flowed with the 
flow and ebb of industrial prosperity. It languished during the 
relatively prosperous years between 1842 and 1845; the temporary 
depression of 1847 combined with the general unrest which prevailed 
in Europe in 1848 revived it for a season, but it petered out in the 
1850’s for lack of food to feed upon. The arguments in favor of the 
Charter were just as valid in the fifties as they had been in the early 
forties but the driving force of misery was lacking, or at any rate 
was greatly weakened. The workingman was enough better off in 
the 1850’s to lose interest in political panaceas however much they 
promised. 

The memory of Chartist failures created in the minds of the 
unionists a strong aversion from any further intermeddling in political 
reform and this aversion was not in fact overcome to any marked 
degree before the very end of the last century. The only kind of 
political activity which the local trades were disposed to countenance 
was the kind which sought to secure legislation favorable to their 
own union interests. 

The consequence was that organized labor as such played a very 
small part in the promotion of the parliamentary reform bills of 1867 
and of 1884. 

The immediate effect of giving the workingman the vote was 
simply to increase the constituents of the two old parties. The 
workingman does not seem to have discriminated much between the 
two. The Conservatives won almost as much support from him 
in the three elections following 1867 as did the Liberals. Yet it is 


708 the worker in modern economic society 

undoubted that his influence in politics was very strikingly increased 
by his securing of the franchise. 

Old party leaders began also to listen with more deference to the 
demands of trade-union officials. The remarkable growth of trade 
unions between 1867 and 1875 was due in large part to the extraor¬ 
dinarily favorable business conditions which prevailed during those 
years. In 1874 this prosperity suddenly came to an end and was 
followed by a long period of hard times. The effect upon the working¬ 
man was as usual very distressing. Wages went down, hours went up, 
unemployment increased by leaps and bounds. The trade unions, 
which were almost all of them mutual-benefit societies, were hard 
put to it to provide support for their idle members. It was futile to 
organize strikes when employers were only too glad for an excuse to 
close down their factories for a season. In fact the trade unions were 
helpless to cope with a situation which was rapidly becoming desperate. 
The politicians were equally helpless. Liberal leaders were prepared 
to support a further extension of the franchise, but it was pretty clear 
that the franchise would not feed the hungry and clothe the naked. 
Yet the politicians had nothing further to suggest. 

But the Socialist had. Once more they appeared upon the scene, 
and this time they brought a quiver full of arguments borrowed 
from the armory of Karl Marx himself. Their new gospel was not 
in essentials so very different from their old one. Like Owen they 
insisted that the recurrent evils of industrial society sprang from the 
defects of the industrial organization. Like Owen they denounced 
capitalistic control of the means of production and demanded for the 
workingman the whole produce of his labour.^ But in place of Owens’ 
co-operative communities they proposed to substitute national 
control. Most of them agreed with Lovett that the means of salvation 
lay through the ballot box and they intended to accomplish social 
revolution by organizing the full voting strength of the workingman 
in its support. 

Their program demanded immediate political action and it ran 
counter to the accepted policy of the Amalgamated Trades. Never¬ 
theless they found stout champions in the trade-union ranks, partic¬ 
ularly in John Burns and Tom Mann. For something like five years 
these ardent young socialists contended in the Trade Union Congresses 
with the old champions of laissez faire trade unionism. And in 1890^ 
thanks partly to the great victory of Burns and Mann in the dock- 
workers’ strike of 1889, they finally won the day. The effect of their 
success was far-reaching. It involved the definite abandonment by 


LABOR IN POLITICS 


709 


the trade unions of their old policy of letting general politics alone and 
committed them to a program of social legislation for which they 
could hardly expect support from either of the existing parties. 

It was from this new unionism of the early 1890’s that the English 
Labour Party was born in 1899. Its birthday marks the definite 
re-entry of the trade union into the field of general politics. It marks 
even more than that. It marks the beginning of an effort on the part 
of the trade unions to dominate the politics of the workingman. For 
the English Labour Party as it was originally constituted limited its 
membership to trade unionists and to members of a few relatively 
small affiliated organizations. Naturally it courted the support of 
the whole workingman vote, but it made no place for unorganized 
labor in its councils. It was in fact a party run in the interests of 
labor by a trade-union committee. 

It first began to play an active part in politics in the election of 
1905. Before that time workingmen had been elected to Parliament. 

Indeed a scattered few had won seats in every election since 1874, 

% 

but their success represented the result of local efforts and they stood 
on no common platform, though they did attempt to follow a concerted 
plan of action after they took their seats. Usually they went by the 
name of the Liberal-Labour group. In the election of 1906 the new 
labor party secured the return of twenty-nine members. These, 
combined with the Liberal-Labour group, gave the workingman a 
fighting strength of some fifty in the House of Commons. In the 
election of 1910 they lost a few seats, but by reason of the more evenly 
balanced strength of the two great parties their parliamentary position 
was really stronger. 

From 1906 until the outbreak of the war they worked in close 
harmony with the Liberals and their influence upon liberal policy 
was very considerable. If one considers the social legislation passed 
in the House of Commons since 1905 the strength of that influence 
is apparent. Old-age pensions, national insurance against sickness, 
disability, and unemployment, child-welfare acts, sweatshop regula¬ 
tions, minimum wage laws, and national employment bureaus—all 
of these demanded by Labour have been conceded by Liberalism. 
In fact the whole trend of social legislation during the last two decades 
in England has to a considerable extent justified the assertion that 
Labour was leading Liberalism by the nose. 

The fundamental defect of the English Labour Party as it existed 
before the war was that the only group outside the organized-labour 
group which it admitted to its councils was the Socialists. It also 


710 


THE WORKER IN MODERN ECONOMIC SOCIETY 


did not completely represent the very workingmen whom it aimed 
to serve because it was fundamentally a federation of trade unionists 
and not a free-for-all workingman’s party. The Great War just 
passed revealed to its leaders both of these defects and set them at 
work to correct them. In 1917 the Labour Party was completely 
reorganized. Instead of a trade-union affair it was converted into a 
national democratic party, which, though recognizing the unions, 
based its organization upon local party associations. Membership 
in these associations was thrown open to every hand worker and brain 
worker who accepted the constitution of the party and subscribed to 
its program. At the same time it stated its program rather more ex¬ 
plicitly than it ever had before. Arthur Henderson stands today on 
much the same platform that William Lovett stood 80 years ago—a 
reorganization of industrial society along socialistic lines to be accom¬ 
plished gradually and by due process of law. 

The Labour Party is the one political movement of present-day 
England which is beyond question a workingman’s movement. 

4 

But it never has commanded anything like the full strength of the 
workingman in politics. The best showing it ever made in a parlia¬ 
mentary election was in December, 1918, when it returned sixty-one 
members to the House of Commons out of a total of over six hundred. 
This means that the majority of the workingmen never have supported 
the Labour Party platform at the polls. Most of them are still to be 
found in the ranks of the Liberals and of the Conservatives. And the 
influence of the workingman in modern English politics has been 
much more potent in modifying the program of the old middle-class 
parties than it has been in promoting the program of its own. 

b) PRESENT ORGANIZATION OF THE BRITISH LABOUR PARTY 1 

With the adoption of its new constitution the Labour Party has 
been transformed from a federation, consisting of Trade Unions, 
Socialist Societies, etc., into a national political party, membership 
in which is open to every man and woman who accepts the Party’s 
program. It was felt to be necessary to include the large body of 
people who were, for various reasons, neither members of a Trade 
Union nor of a Socialist Society. The new constitution makes indi¬ 
vidual membership a cardinal point of the scheme. 

1 Adapted from The Labour Year Book, 1919, pp. 3-4. (Published by British 
Labour Party, 33 Eccleston Square, London.) 


LABOR IN POLITICS 


711 

The Annual Party Conference will be constituted, as hitherto, of 
delegates representing the affiliated Trade Unions and other societies, 
on the basis of one for each 1,000 members, and of the local Labour 
Party delegates. The members of the National Executive of the 
Party, and the duly sanctioned Parliamentary candidates have the 
right to attend the Conference ex officio, but have no power to vote 
unless they are chosen as delegates. 

c) THE RECONSTRUCTION PROGRAM OF THE BRITISH LABOR 
PARTY—LABOR AND THE NEW SOCIAL ORDER 1 

The end of a civilization .—We need to beware of patchwork. The 
view of the Labor party is that what has to be reconstructed after the 
war is not this or that government department, or this or that piece of 
social machinery; but, so far as Britain is concerned, society itself. 

If we in Britain are to escape from the decay of civilization itself 
we must ensure that what is presently to be built up is a new social 
order, based not on fighting but on fraternity—not on the competitive 
struggle for the means of a bare life, but on a deliberately planned 
cooperation in production and distribution for the benefit of all who 
participate by hand or by brain—not on the utmost possible inequality 
of riches, but on a systematic approach towards a healthy equality of 
material circumstances for every person born into the world, but, in 
industry as well as in government, on that equal freedom, and that 
widest possible participation in power, both economic and political, 
which is characteristic of democracy. The four pillars of the house 
that we propose to erect, resting upon the common foundation of the 
democratic control of society in all its activities, may be termed: 
(1) the universal enforcement of the national minimum; (2) the 
democratic control of industry; (3) the revolution in national finance; 
and (4) the surplus wealth for the common good. 

1. The universal enforcement of a national minimum .—The first 
principle of the Labor party—in significant contrast with those of the 
capitalist system, whether expressed by the Liberal or by the Conserva¬ 
tive party—is the securing to every member of the community, in 
good times and bad alike (and not only to the strong and able, the 
well born or the fortunate), of all the requisites of healthy life and 
worthy citizenship. This is in no sense a “ class ” proposal. Such an 
amount of social protection of the individual, however poor or lowly, 

1 Adapted from a reprint of Labor and the New Social Order , published in the 
United States by the New Republic, Vol. XIV, No. 172, Part II, pp. 3-12. 


712 


THE WORKER IN MODERN ECONOMIC SOCIETY 


from birth to death, is, as the economist now knows, as indispensable 
to fruitful cooperation as it is to successful combination; and it 
affords the only complete safeguard against that insidious degradation 
of the standard of life which is the worst economic and social calamity 
to which any community can be subjected. We are members one of 
another. No man liveth to himself alone. If any, even the humblest, 
is made to suffer, the whole community and every one of us, whether 
or not we recognize the fact, is thereby injured. Generation after 
generation this has been the corner-stone of the faith of Labor. It 
will be the guiding principle of any Labor government. 

Thus it is that the Labor party today stands for the universal 
application of the policy of the national minimum, to which (as em¬ 
bodied in the successive elaborations of the Factory, Mines, Railways, 
Shops, Merchant Shipping, and Truck acts, the Public Health, Hous¬ 
ing, and Education acts and the Minimum Wage act—all of them aim¬ 
ing at the enforcement of at least the prescribed minimum of leisure, 
health, education, and subsistence) the spokesmen of Labor have 
already gained the support of the enlightened statesmen and econo¬ 
mists of the world. In view of the fact that many millions of wage- 
earners, notably women and less skilled workmen in various occupa¬ 
tions, are unable by combination to obtain wages adequate for decent 
maintenance in health, the Labor party intends to see to it that the 
Trade Boards act is suitably amended and made to apply to all 
industrial employments in which any considerable number of those 
employed obtain less than 30s. per week. This minimum of not less 
than 305. per week (which will need revision according to the level of 
prices) ought to be the very lowest statutory base line for the least 
skilled adult workers, men or women, in any occupation, in all parts 
of the United Kingdom. 

It has always been a fundamental principle of the Labor party that, 
in a modern industrial community, it is one of the foremost obligations 
of the government to find, for every willing worker, whether by hand 
or by brain, productive work at standard rates. 

It is now known that the government can, if it chooses, arrange 
the public works and the orders of national departments and local 
authorities in such a way as to maintain the aggregate demand for 
labor in the whole kingdom (including that of capitalist employers) 
approximately at a uniform level from year to year; and it is therefore 
a primary obligation of the government to prevent any considerable 
or widespread fluctuations in the total numbers employed in times of 
good or bad trade. 


LABOR IN POLITICS 


713 


In so far as the government fails to prevent unemployment—• 
whenever it finds it impossible to discover for any willing worker, 
man or woman, a suitable situation at the standard rate—the Labor 
party holds that the government must, in the interest of the com¬ 
munity as a whole, provide him or her with adequate maintenance, 
either with such arrangements for honorable employment or with 
such useful training as may be found practicable, according to age, 
health and previous occupation. 

2. The democratic control of industry .—The universal application 
of the policy of the national minimum is, of course, only the first of 
the pillars of the house that the Labor party intends to see built. 
What marks off this party most distinctly from any of the other 
political parties is its demand for the full and genuine adoption of the 
principle of democracy. The first condition of democracy is effective 
personal freedom. This has suffered so many encroachments during 
the war that it is necessary to state with clearness that the complete 
removal of all the war-time restrictions on freedom of speech, freedom 
of publication, freedom of the press, freedom of travel and freedom of 
choice of place of residence and kind of employment must take place the 
day after peace is declared. But unlike the Conservative and Liberal 
parties, the Labor party insists on democracy in industry as well as 
in government. It demands the progressive elimination from the 
control of industry of the private capitalist, individual or joint-stock; 
and the setting free of all who work, whether by hand or by brain, 
for the service of the community, and of the community only. And 
the Labor party refuses absolutely to believe that the British people 
will permanently tolerate any reconstruction or perpetuation of the 
disorganization, waste and inefficiency involved in the abandonment 
of British industry to a jostling crowd of separate private employers, 
with their minds bent, not on the service of the community, but— 
by the very law of their being—only on the utmost possible profiteer¬ 
ing. 

The Labor party stands not merely for the principle of the com¬ 
mon ownership of the nation’s land, to be applied as suitable oppor¬ 
tunities occur, but also, specifically, for the immediate nationalization 
of railways, mines and the production of electrical power. We hold 
that the very foundation of any successful reorganization of British 
industry must necessarily be found in the provision of the utmost 
facilities for transport and communication, the production of power 
at the cheapest possible rate and the most economical supply of both 
electrical energy and coal to every corner of the kingdom. Hence 



714 THE worker in modern economic society 

the Labor party stands, unhesitatingly, for the national ownership 
and administration of the railways and canals, and their union, along 
with harbors and roads, and the posts and telegraphs—not to say 
also the great lines of steamers which could at once be owned, if not 
immediately directly managed in detail, by the government—in a 
united national service of communication and transport; to be worked, 
unhampered by capitalist, private or purely local interests (and with a 
steadily increasing participation of the organized workers in the 
management, both central and local), exclusively for the common good. 

In the production of electricity, for cheap power, light, and heat¬ 
ing, this country has so far failed, because of hampering private inter¬ 
ests, to take advantage of science. What is called for immediately 
after the war, is the erection of a score of gigantic “ super-power 
stations,” which could generate, at incredibly cheap rates, enough 
electricity for the use of every industrial establishment and every 
private household in Great Britain; the present municipal and joint- 
stock electrical plants being universally linked up and used for local 
distribution. 

But with railways and the generation of electricity in the hands 
of the public, it would be criminal folly to leave to the present one 
thousand five hundred colliery companies the power of “holding up” 
the coal supply. These are now all working under public control, on 
terms that virtually afford to their shareholders a statutory guarantee 
of their swollen incomes. The Labor party demands the immediate 
nationalization of mines, the extraction of coal and iron being worked 
as a public service (with a steadily increasing participation in the 
management, both central and local, of the various grades of persons 
employed); and the whole business of the retail distribution of 
household coal being undertaken, as a local public service, by the 
elected municipal or county councils. And there is no reason why 
coal should fluctuate in price any more than railway fares, or why the 
consumer should be made to pay more in winter than in summer, or 
in one town than in another. What the Labor party would aim at is, 
for household coal of standard quality, a fixed and uniform price for 
the whole kingdom, payable by rich and poor alike, as unalterable as 
the penny postage stamp. 

But the sphere of immediate nationalization is not restricted to 
these great industries. We shall never succeed in putting the gigantic 
system of health insurance on a proper footing, or secure a clear field 
for the beneficent work of the Friendly Societies, or gain a free hand 


LABOR IN POLITICS 


715 


for the necessary development of the urgently called for Ministry 
of Health and the Local Public Health Service, until the nation 
expropriates the profit-making industrial insurance companies, which 
now so tyrannously exploit the people with their wasteful house-to- 
house industrial life assurance. 

Moreover, the Labor party holds that the municipalities should 
not confine their activities to the necessarily costly services of educa¬ 
tion, sanitation and police; nor yet rest content with acquiring control 
of the local water, gas, electricity and tramways; but that every 
facility should be afforded to them to acquire (easily, quickly and 
cheaply) all the land they require, and to extend their enterprises 
in housing and town planning, parks, and public libraries, the pro¬ 
vision of music and the organization of recreation; and also to under¬ 
take, besides the retailing of coal, other services of common utility, 
particularly the local supply of milk, wherever this is not already 
fully organized by a cooperative society. 

3. The revolution in national finance .—In taxation, also, the inter¬ 
ests of the professional and house-keeping classes are at one with those 
of manual workers. Too long has our national finance been regulated, 
contrary to the teaching of political economy, according to the wishes 
of the possessing classes and the profits of the financiers. The colossal 
expenditure involved in the present war (of which, against the protest 
of the Labor party, only a quarter has been raised by taxation, whilst 
three-quarters have been borrowed at onerous rates of interest, to be 
a burden on the nation’s future) brings things to a crisis. When peace 
comes, capital will be needed for all sorts of social enterprises, and the 
resources of government will necessarily have to be vastly greater 
than they were before the war. Meanwhile innumerable new private 
fortunes are being heaped up by those who have taken advantage 
of the nation’s needs; and the one-tenth of the population which owns 
nine-tenths of the riches of the United Kingdom, far from being made 
poorer, will find itself, in the aggregate, as a result of the war, drawing 
in rent and interest and dividends a larger nominal income than ever 
before. Such a position demands a revolution in national finance. 
How are we to discharge a public debt that may well reach the almost 
incredible figure of seven thousand million pounds sterling, and at the 
same time raise an annual revenue which, for local as well as central 
government, must probably reach one thousand millions a year ? It 
is over this problem of taxation that the various political parties will 
be found to be most sharply divided. 


716 


THE WORKER IN MODERN ECONOMIC SOCIETY 


For the raising of the greater part of the revenue now required 
the Labor party looks to the direct taxation of the incomes above the 
necessary cost of family maintenance; and, for the requisite effort 
to pay off the national debt, to the direct taxation of private fortunes 
both during life and at death. The income tax and super-tax ought 
at once to be thoroughly reformed in assessment and collection, in 
such a way as to make the real sacrifice of all the tax-payers as nearly 
as possible equal. This would involve assessment by families instead 
of by individual persons, so that the burden is alleviated in proportion 
to the number of persons to be maintained. It would involve the rais¬ 
ing of the present unduly low minimum income assessable to the tax, 
and the lightening of the present unfair burden on the great mass of 
professional and small trading classes by a new scale of graduation, 
rising from a penny in the pound on the smallest assessable income up 
to sixteen or even nineteen shillings in the pound on the highest income 
of the millionaires. The excess profits tax might well be retained in 
an appropriate form; whilst, so long as mining royalites exist, the 
mineral rights duty ought to be increased. The steadily rising un¬ 
earned increment of urban and mineral land ought, by an appropriate 
direct taxation of land values, to be wholly brought into the public 
exchequer. At the same time, for the service and redemption of the 
national debt, the death duties ought to be regraduated, much more 
strictly collected, and greatly increased. In this matter we need, in 
fact, completely to reverse our point of view, and to rearrange the 
whole taxation of inheritance from the standpoint of asking what is 
the maximum amount that any rich man should be permitted at death 
to divert, by his will, from the national exchequer, which should 
normally be the heir to all private riches in excess of a quite moderate 
amount by way of family provision. But all this will not suffice. It 
will be imperative at the earliest possible moment to free the nation 
from at any rate the greatest part of its new load of interest bearing 
debt for loans which ought to have been levied as taxation; and the 
Labor party stands for a special capital levy to pay off, if not the whole, 
a very substantial part of the entire national debt—a capital levy 
chargeable like the death duties on all property, but (in order to secure 
approximate equality of sacrifice) with exemption of the smallest 
savings, and for the rest at rates very steeply graduated, so as to take 
only a small contribution from the little people and a very much larger 
percentage from the millionaires. 


LABOR IN POLITICS 


717 


Over this issue of how the financial burden of the war is to be 
borne, and how the necessary revenue is to be raised, the greatest 
political battles will be fought. In this matter the Labor party claims 
the support of four-fifths of the whole nation, for the interests of the 
clerk, the teacher, the doctor, the minister of religion, the average retail 
shopkeeper and trader, and all the mass of those living on small 
incomes are identical with those of the artisan. The landlords, the 
financial magnates, the possessors of great fortunes will not, as a class, 
willingly forego the relative immunity.that they have hitherto enjoyed. 

4. The surplus wealth for the common good .—In the disposal oi the 
surplus above the standard of life society has hitherto gone as far wrong 
as in its neglect to secure the necessary basis of any genuine industrial 
efficiency or decent social order. We have allowed the riches of our 
mines, the rental value of the lands superior to the margin of cultiva¬ 
tion, the extra profits of the fortunate capitalists, even the material 
outcome of scientific discoveries—which ought by now to have made 
this Britain of ours immune from class poverty or from any widespread 
destitution—to be absorbed by individual proprietors; and then 
devoted very largely to the senseless luxury of an idle rich class. 
Against this misappropriation of the wealth of the community, the 
Labor party—speaking in the interests not of the wage-earners alone, 
but of every grade and section of producers by hand or by brain, not 
to mention also those of the generations that are to succeed us, and of 
the permanent welfare of the community—emphatically protests. 
One main pillar of the house that the Labor party intends to build is 
the future appropriation of the surplus, not to the enlargement of any 
individual fortune, but to the common good. It is from this con¬ 
stantly arising surplus (to be secured, on the one hand, by nationaliza¬ 
tion and municipalization and, on the other, by the steeply graduated 
taxation of private income and riches) that will have to be found the 
new capital which the community day by day needs for the per¬ 
petual improvement and increase of its various enterprises, for which 
we shall decline to be dependent on the usury exacting financiers. 
It is from the same source that has to be defrayed the public provision 
for the sick and infirm of all kinds (including that for maternity and 
infancy) which is still so scandalously insufficient; for the aged and 
those permanently incapacitated by accident or disease, now in many 
ways so imperfectly cared for; for the education alike of children, of 
adolescents and of adults, in which the Labor party demands a 


718 THE WORKER IN MODERN ECONOMIC SOCIETY 

genuine equality of opportunity, overcoming all differences of material 
circumstances; and for the organization of public improvements of all 
kinds, including the brightening of the lives of those now condemned 
to almost ceaseless toil, and a great development of the means of 
recreation. From the same source must come the greatly increased 
public provision that the Labor party will insist on being made for 
scientific investigation and original research, in every branch of 
knowledge, not to say also for the promotion of music, literature and 
fine art, which have been under capitalism so greatly neglected, and 
upon which, so the Labor party holds, any real development of civiliza¬ 
tion fundamentally depends. 

Society, like the individual, does not live by bread alone—does 
not exist only for perpetual wealth production. It is in the proposal 
for this appropriation of every surplus for the common good—in the 
vision of its resolute use for the building up of the community as a 
whole instead of for the magnification of individual fortunes—that 
the Labor party, as the party of the producers by hand or by brain, 
most distinctively marks itself off from the older political parties, 
standing, as these do, essentially for the maintenance, unimpaired, of 
the perpetual private mortgage upon the annual product of the nation 
that is involved in the individual ownership of land and capital. 

What the Labor party stands for in all fields of life is, essentially, 
democratic cooperation; and cooperation involves a common purpose 
which can be agreed to; a common plan which can be explained 
and discussed, and such a measure of success in the adaptation of means 
to ends as will ensure a common satisfaction. An autocratic sultan 
may govern without science if his whim is law. A plutocratic party 
may choose to ignore science, if it is heedless whether its pretended 
solutions of social problems that may win political triumphs ultimately 
succeed or fail. But no Labor party can hope to maintain its position 
unless its proposals are, in fact, the outcome of the best political 
science of its time; or to fulfil its purpose unless that science is con¬ 
tinually wresting new fields from human ignorance. Hence, although 
the purpose of the Labor party must, by the law of its being, remain 
for all time unchanged, its policy and its programme will, we hope, 
undergo a perpetual development, as knowledge grows, and as new 
phases of the social problem present themselves, in a continually 
finer adjustment of our measures to our ends. If law is the mother 
of freedom, science, to the Labor party, must be the parent of law. 


LABOR IN POLITICS 


719 


2. EARLY WORKINGMEN’S PARTIES IN THE 

UNITED STATES 

a) the workingmen’s party OF NEW YORK city: 1829-31 1 

The first step towards the formation of a workingmen’s party 
in New York City was taken at a meeting of “mechanics and others’* 
in April, 1829. 

The resolutions adopted condemned the private ownership of land, 
the hereditary transmission of wealth, banking privileges, chartered 
monopolies, auction sales and the exemption of church property from 
taxation, and favored a mechanics’ lien law and the abolition of 
imprisonment for debt. The preliminary portion of the report of 
the committee laid stress upon the desirability of a scheme of com¬ 
munal education. Under the leadership of Evans and Owen this 
became the chief plank in the platform of the party. 

In the fall election of 1829 the new party nominated a full list of 
candidates for the Assembly. Its nominees were bona fide working¬ 
men one of whom was elected with a vote of over 6,000. 

The first split in the party was on the subject of agrarianism. 
Equal republican education was heralded by Frances Wright, Robert 
Dale Owen and George H. Evans as the panacea for all the social 
and economic ills which then afflicted the American people. This 
was, for them, the one important plank in their political platform. 
In comparison with the communal form of education, equal division 
of property and the abolition of inheritance were matters of secondary 
importance. 

For the fall campaign of 1830 in New York City, four tickets 
were placed in the field: Tammany, “Clay Workingmen,” Working¬ 
men (Owen-Evans wing) and Agrarian (Skidmore branch of the 
Workingmen). The Owen-Evans party this time polled less than 
2,000 votes. 

The Democratic party won a complete victory in the state, and 
Tammany elected its entire city ticket. It has been estimated that 
about 3,800 workingmen went back into the Tammany fold because 
of its advocacy of a mechanics’ lien law. 

This election marks the end of the Workingmen’s party. There 
are traces of its existence in 1831, but after that even its fragments 
drop out of sight. 

1 Adapted with permission from Frank T. Carlton, Political Science Quarterly 
(September 1907), pp. 4° 2_I 5- 


720 


THE WORKER IN MODERN ECONOMIC SOCIETY 


In conclusion we may profitably inquire: What were the concrete 
results of the activity of this loose and ephemeral political organiza¬ 
tion? The chief effects may be summed up as follows: (i) The 
passage of a mechanics’ lien law by the New York legislature. It 
was clearly for the purpose of placating the workingmen that this 
measure was supported and pushed through by Tammany. (2) The 
abolition of imprisonment for debt, by a law passed in the spring of 
1831. The stand taken by the Workingmen’s party clearly hastened 
legislative action in this matter. (3) The appropriations for edu¬ 
cational purposes in New York City increased very visibly at this 
time. (4) When, in 1833-37, the strong trade-union movement arose, 
the fate of the Workingmen’s party was accepted as a conclusive 
argument against direct political effort. Hence the trade unions 
kept aloof from party politics and merely questioned candidates as 
to their position on measures which were regarded as affecting the 
interests of labor. 

b) LABOR POLITICS AND THE BUSINESS CYCLE 1 

Labor has its modus operandi for every phase of the business 
cycle. When depression first turns to prosperity, labor demands a 
shorter day. When work is irregular it is willing to work long hours 
on the day when work presents itself, but when work becomes a daily 
routine it wants the day reduced. Steady work, however, swells 
business prosperity, in that it gives labor a larger total income than 
it had before, which it carries to market in the form of demand for 
goods which it previously wanted but could not have. This demand 
creates a relative scarcity in the goods it wants and thus sends prices 
beyond its own reach. Labor now turns from the demand for shorter 
hours to a demand for higher wages to meet the higher prices. This 
continues as prices soar until finally it recognizes the dilemma of 
catching up with prices which it itself, in part at least, advances with 
each increase in purchasing power which it secures. Once it recognizes 
this dilemma, it goes into politics to curb that element in the commu¬ 
nity which in the meantime has been profiting from the upward 
changing prices. Here it demands banking reform, anti-monopoly 
legislation, government control or regulation of railroad and other 

1 Adapted with permission from Edward B. Mittleman, “Chicago Labor in 
Politics, 1877-96,” Journal of Political Economy , XXVIII (May, 1920), 407-9, 
426-27. 


LABOR IN POLITICS 


721 


public utilities, land reform, new taxes. But it is only the leadership 
that goes into politics at this point—that is, at the crest of the business 
cycle. The rank and file still have steady employment and are 
willing to let well enough alone. When the cycle finally takes its 
downward course and the factories are closed for part time or alto¬ 
gether, they too begin to view politics with favor and now put content 
into the erstwhile empty aspirations of their leaders. Alongside of 
politics, labor carries an economic program for the contingencies of 
depression. When prosperity first turns into depression, it defends 
the wages it earned during prosperity. If the depression continues, 
it demands shorter hours, but this time not for the purpose of spreading 
the available work over a large number of workers. This is the 
ordinary circuit that labor travels. Sometimes it takes on additional 
luggage. In times of prosperity it will take on consumers’ co-operation 
to reduce the cost of living to the extent of the middleman’s profit; 
in time of depression it will take on producers’ co-operation to give 
some of the unemployed employment. On four previous occasions 
Chicago labor has gone into politics—once in 1877, once in T882, and 
finally in 1893. 

Why were the parties so short-lived? Labor politics thus far 
have been wholly palliative. Only at the end of a series of strikes 
aimed to keep wages abreast of rising prices has labor gone into 
politics. The masses did not go into it until depression came, and 
went out of it as soon as time brought relief. Under such conditions 
parties could not thrive. Each disavowal of politics made the next 
avowal so much the harder. Even after it had been again solemnly 
resolved that labor had to organize on the political as well as on the 
economic side, it was then difficult to put content into the resolution. 
There was no organization; there was no “glorious past.” There 
were no “leaders,” spell-binders, ward-heelers, “captains,'” with 
which to man an organization. Conventions split as soon as the 
gavel fell. In the absence of solid organization the old parties had 
a chance to “play” the new to death. They played one faction 
against the other and lured away whatever leadership manifested 
itself. 

The socialists were the only ones that brought organization and 
leadership to the labor parties. But they brought the kind they had 
in their own organization and those were not altogether suited for 
getting votes. 


722 


THE WORKER IN MODERN ECONOMIC SOCIETY 


3. THE POLITICAL POLICY OF THE AMERICAN 
FEDERATION OF LABOR 

a) THE PRESENT PROCEDURE OF THE A.F. OF L . 1 

Instead of trying to form a political party of its own, the A.F. of L. 
seeks, through its legislative agents, to obtain laws favorable to Labor. 
The Trade Unionists are supposed to remain members of the capitalist 
parties, but they are instructed to give all aid to the friends of Labor 
and to seek in every manner to defeat the enemies of Labor. They are 
to endeavor to have the capitalist parties put up for office prominent 
Trade Unionists in order that these men shall, when elected, represent 
Labor in the various legislatures and in the administration of the 
government. 

(1) The officials attend the national conventions of the capitalist 
political parties and seek to pledge these parties to certain labor 
measures. (2) They endeavor to obtain from those seeking election 
as legislators definite pledges that they favor certain labor measures. 
(3) They maintain at all the state capitals and at Washington labor 
lobbies, intended to accelerate the movement of labor legislation 
and to watch and report upon the records of legislators. (4) The 
various unions are called upon to take active steps to have actual 
Trade Unionists nominated, wherever possible, for public office, and 
to insure their election. Where it is not possible to have Trade 
Unionists nominated, it is now the declared policy of the Federation 
to determine which candidates are the friends of Labor and then to 
seek to insure their election. When in 1906 it was acknowledged that 
the legislative agents had failed to obtain results, the American 
Federation of Labor was driven into partisan politics. It was forced 
to renounce some of its earlier non-partisan maxims and to ally 
itself with one of the capitalist parties, in the hope of getting relief 
from the wrongs suffered by Labor. The political policies of the 
American Federation of Labor have evolved year by year. And 
while it still professes to be non-partisan it is now unquestionably 
allied through its national officers with the Democratic Party. 

This support of the Democratic Party by the officials of the 
A.F. of L. does not mean that the rank and file of Tiade Unionists 
are Democrats. In fact, there are Trade Unionists running for office 
every election as Democrats, Republicans, Progressives, and Socialists. 

1 Adapted with permission from Robert Hunter, Labor in Politics , pp. 42-45. 
(The Socialist Party, 1915.) 


LABOR IN POLITICS 


723 


Furthermore, the local unions, in many parts of the country, refuse 
to take a definite stand in the interest of any party. Probably the 
majority of Trade Unionists are not Democrats, and for that reason 
the officials of the A.F. of L. have been until recently exceedingly 
cautious in declaring openly for the Democratic party. Nevertheless, 
as it appears, the efforts of the leading officials for some years have 
been to throw as many labor votes in national elections as possible 
to the support of that party. 1 

b) THE POLITICAL AIMS OF THE AMERICAN FEDERATION 

OF LABOR 2 

The political methods employed by the American Federation of 
Labor can be understood only in the light of what legislation the 
Federation has been trying to secure from the political state. The 
Federation of Organized Trades and Labor Unions, the precursor 
of the A. F. of L., adopted in 1881 thirteen fundamental aims which 
were of such a character as could only be realized by legislation. The 
chief of these were the incorporation of labor unions, the abolition of 
child labor and the compulsory education of children, uniform 
apprenticeship laws, the enforcement of the eight-hour-day for federal 
employees, the abolition of the compulsory company store system, the 
creation of a federal bureau of labor, and the prohibition of the importa¬ 
tion of contract laborers. 

This political program, however, fell more and more into the 
background, and the emphasis was instead laid upon the bettering of 
labor conditions by means of collective bargaining. In 1894 however, 
a platform proposed by the socialists was adopted, with the exception, 
indeed, of the most important plank providing for “the collective 
ownership of the means of production and distribution.” Although 
Mr. Gompers was then defeated for the presidency, he regained office 
the next year and has ever since been re-elected. Although there has 
always been a strong socialistic element within the A. F. of L., Mr. 
Gompers and the dominant group have always opposed both its 
principles and its methods. 

Largely as a result of the suit brought against the Danbury Hatters 
under the Sherman Anti-Trust Act and the frequent use of the injunc¬ 
tion by the employers the A.F. of L. in 1906 addressed a letter to the 

1 [Note: The Executive Council of the A.F. of L. has indorsed the Democratic 
presidential candidates in 1908, 1912, 1916, and 1920.— Ed.] 

3 By Paul H. Douglas. 


724 


THE WORKER IN MODERN ECONOMIC SOCIETY 


President which they termed, “Labor’s Bill of Grievances.” This 
again called among other things, for an effective eight-hour-law for 
federal employees, for granting to federal employees the right to 
petition Congress, and above all for the abolition of the use of the 
injunction in labor disputes and the exemption of labor from the pro¬ 
visions of the Anti-Trust acts. It was at this time that the A. F. of L. 
tried to get labor sympathizers elected to Congress by urging its 
members “to reward your friends and punish your enemies.” In 
1908, the Democratic candidate for president, Mr. Bryan, advocated 
as one of his chief issues the abolition of the injunction in labor 
disputes. The Clayton Act of 1914, passed by a Democratic Congress 
was supposed to meet the chief demands of labor, although later 
decisions have proved it not to change appreciably the previous 
legal status of the unions. 

In late 1919, after the government had secured an injunction to 
prevent the miners’ strike, the officers of all the internationals issued 
a demand that the right to strike should not be impaired, injunctions 
should be limited, and “full and adequate protection” granted to 
“voluntary associations of wage-earners organized not for profit.” 

In 1920, the A. F. of L., much against the wishes of Mr. Gompers 
and his followers, adopted a resolution pledging the organization to 
support the “Plumb Plan” for the railroads, 1 under which the roads 
would be owned by the government and managed by a board repre¬ 
senting equally the government, the employees, and the active 
executives. The executive council of the A.F. of L., however, have 
taken few steps or none in behalf of this resolution. 

The American Federation of Labor has in the main either been 
lukewarm toward or actively opposed to so-called protective legisla¬ 
tion for men. It has opposed the regulation of men’s hours by the 
state, save in special cases. Consequently it would oppose minimum 
wage laws for men, even were they constitutionally possible. For 
some time Mr. Gompers favored revising the employers’ liability 
laws instead of adopting workmen’s compensation although he later 
changed his point of view. Mr. Gompers and most of his followers 
are also opposed to unemployment insurance, health insurance, and 
old-age pensions, although there is a difference of opinion here. 

The Federation, however, has earnestly sought legislation to 
better the conditions of children, women, and government employees. 
Its attitude toward protective legislation for women, however, has 

1 See p. 916. 


LABOR IN POLITICS 


725 


been at best ambiguous, since it has not actively favored minimum 
wage laws and certain other measures for them. 

On the whole the political aims of Mr. Gompers and his followers 
have been to use the state merely to free labor from the legal 
restrictions and disabilities attached to the exercise of their economic 
powers. Once this was done, however, they would rely almost exclu¬ 
sively upon their economic power working through the agency of 
collective bargaining to improve the conditions of the workers. Their 
belief that the state should take its hands off the regulation of most 
industrial relations is thus strikingly similar to the individualism of 
Herbert Spencer and to the liberalism of Cobden, Bright, and Glad¬ 
stone in their belief in the liberation of intercourse. 

Yet during all this time, there has been and still is, a powerful 
group within the A.F. of L. which believes that the state should be 
used as a positive force to improve the status of labor. This latter 
group have consequently been more anxious to have labor representa¬ 
tives in the legislative bodies than Mr. Gompers and his group because 
they want to have the state do more things than he. Yet paradoxically 
enough, Mr. Gompers seems to have found it increasingly necessary 
to go into politics in order to keep himself free from them. 

*n 

4. HISTORICAL SKETCH OF THE SOCIALIST MOVEMENT 

IN THE UNITED STATES 

a) THE SOCIALIST LABOR PARTY AND THE SOCIALISTS 1 

It was in 1874 that various working class elements, including 
refugee German Marxists and revolutionary American laborers, came 
together to form an organization which soon became known as the 
Socialist Labor Paity. 

For some years the party struggled under, great disadvantages. 
Political activity was sometimes discouraged altogether, and some¬ 
times attempted in temporary alliance with a larger radical group— 
the Greenback Party in 1880 and the United Labor Party in New York 
in 1886. 

An important crisis occurred in the early eighties when Anarchism, 
long ago driven from the International in the person of Bakunin, 
threatened to win to its propaganda the entire American movement. 
A new organization, the International Working People’s Association, 
made serious inroads upon the membership of the S.L.P. and a large 

1 Adapted with permission from the American Labor Year Book (1916), pp. 
89-92. (Rand School of Social Science, New York.) 


726 THE WORKER IN MODERN ECONOMIC SOCIETY 

element in the Socialist ranks was openly desirous of affiliation, 
In 1883, however, the situation was faced, and the policy of Anarchism 
definitely repudiated by the party. 

Their relation to the labor unions has always presented a serious 
problem to the American Socialist parties. By 1886 the Knights of 
Labor had become powerful, and by 1890 the American Federation of 
Labor had already begun to overshadow the older body. By this time 
the S.L.P. had come under the headship of Daniel De Leon, who 
continued as leader until his death in 1914. De Leon soon became 
involved in quarrels which brought the party as a whole in antagonism 
to each of these national bodies. By the creation of the Socialist 
Trades and Labor Alliance in 1895, a labor federation under the 
direct control of the party, a final breach was made, and the Socialist 
Labor Party remains still opposed to all non-Socialist unions. During 
this period insurgency was rapidly developing within the party. In 
1899 the break proved final, and the seceding members proceeded to 
form a new organization at Rochester. 

Meanwhile Socialism was beginning to emerge in the West, in 
forms growing directly out of American conditions. Eugene V. Debs, 
whose imprisonment in connection with the strike of the American 
Railway Union had made him a Socialist, had gathered together a 
vaguely Socialist organization, and another group, centering around 
two Socialist publications, The Coming Nation and The Appeal to 
Reason, had in 1897 united with these followers of Debs to form the 
Social Democracy of America. As the majority of the new party, 
however, inclined more to Utopian schemes of colonization than to 
political action, a split took place almost immediately, and Eugene 
V. Debs and Victor Berger, leader of the Social Democracy in Wiscon¬ 
sin, bolted to found still another organization, the Social Democratic 
Party of America. It was to the last-named group that the Rochester 
wing of the S.L.P. made its overtures for union in 1899. 

For the purposes of the election of 1900, however, they combined 
together and in 1901 formed what presently received the title of the 
Socialist Party. The vote polled by the Socialist Party in the presi¬ 
dential elections from 1900 on has been as follows: 


Vote Percentage of 

Year in ooo’s Total Vote 

1900. 88 0.6 

I 9°4 . 402 2.9 

1908. 421 2.9 

!9I2. 897 5.9 

. 590 3.2 

1920. 918 3.5 










LABOR IN POLITICS 


727 


b ) THE SOCIALIST PARTY AND THE WAR 1 

Majority report adopted at the St. Louis Convention April 7,1917: 
“The people of the United States have no quarrel with the people 
of Germany or any other country. They have been plunged into 
this war by the trickery and treachery 01 the ruling class. We brand 
the declaration of war by our government as a crime against the 
people. In all modern history there has been no war more unjustifiable 
than the war in which we are about to engage. No greater dishonor 
has ever been forced upon a people than that which the capitalist is 
forcing upon this nation against its will. Should conscription be 
forced upon the people, we pledge ourselves to the support of all 
mass movements in opposition to conscription.” 

C) THE PRESENT COMPOSITION AND POLICIES OF THE 

SOCIALIST PARTY 2 

The membership in the Socialist party in 1918 was approximately 
82,000. Shortly after the outbreak of the war, the special convention 
of the party denounced it as the “most unjustifiable war in history.” 
A number of pro-war socialists then withdrew from the party but the 
municipal elections of the fall showed an extraordinary increase in 
the socialist vote and the party membership rose in the early months of 
1919 to 105,000. During 1919, however, the party membership 
declined rapidly due partially to the war-time suppression of many 
meetings but chiefly because of internal dissension. A large section 
of the members, swayed by the example of the Bolsheviks in Russia, 

wished to use “mass-action” (which probably meant violence) to 

\ 

attain power and then to install the dictatorship of the proletariat. 
The dominant group in the party opposed this and two groups seceded, 
forming the Communist and Communist Labor parties. The Com¬ 
munist Party was later declared to be illegal and many of its members 
deported. The two parties were driven underground but seem to 
have combined in the recently organized Workers Party. 

A struggle still went on inside the Socialist party between the 
“left” and “right” wings and the membership declined still farther. 
It was only 35,000 during the latter part of 1919, and fell to 27,000 
in 1920 and 17,000 in 1921. 

1 Taken with permission from the American Labor Year Book (1917-18), 
pp. 50-53. (Rand School of Social Science, New York.) 

2 Adapted with permission from the American Labor Year Book (1921-22), 
pp. 390-408. 


728 


THE WORKER IN MODERN ECONOMIC SOCIETY 


In 1920, the party voted to apply for membership in the Third 
(Moscow) International but this application was at first refused by 
that body. The Third International later prescribed twenty-one con¬ 
ditions for membership which were so stringent and extreme that the 
Executive Committee of the American party and later the party itself 
refused to conform. 

The following excerpts from the 1920 declaration of principles 
indicate what the Socialist party at present stands for: 

The Socialist party of the United States demands that the country 
and its wealth be redeemed from the control of private interests and turned 
over to the people to be administered for the equal benefit of all. 

America is not owned by the American people. Our so-called national 
wealth is not the wealth of the nation but of the privileged few. These are 
the ruling classes of America. They are small in numbers but they dominate 
the lives and shape the destinies of their fellowmen. They own the people’s 
jobs and determine their wages; they control the markets of the world and 
fix the prices of farm products; they own their homes and fix their rents; 
they own their press and formulate their convictions; they own the govern¬ 
ment and make their laws; they own their schools and mould their minds. 

Around and about the capitalist class cluster the numerous and varied 
groups of the population generally designated as the “middle classes.” 
They consist of farm owners, small merchants and manufacturers, pro¬ 
fessionals and better paid employees. Their economic status is often 
precarious. They live in hopes of being lifted into the charmed spheres of 
the ruling classes. Their social psychology is that of retainers of the 
wealthy. They are staunch upholders of the existing order of social inequali¬ 
ties. 

The bulk of the American people is composed of workers. Workers on 
the farm and in the factory, in offices, and counting houses, in schools and 
personal service, workers of hand and brain, all men and women who render 
useful service to the community in the countless ramified ways of modern 
civilization. They have made America what it is. They sustain America 
from day to day. They bear most of the burdens of life and enjoy but few 
of its pleasures. They create the enormous wealth of the country but 
live in constant dread of poverty. They feed and clothe the rich and yet 
bow to their alleged superiority. They keep alive the industries but have no 
say in their management. They constitute the majority of the people but 
have no control in the government. Despite the forms of political equality, 
the workers of the United States are virtually a subject class. 

The Socialist party is the party of the workers. It espouses their 
cause because in the workers lies the hope of the political, economic, and 
social redemption of the country. The ruling class and their retainers 
cannot be expected to change the iniquitous system of which they are the 


LABOR IN POLITICS 


729 


beneficiaries. Individual members of these classes often join in the struggle 
against the capitalist order from motives of personal idealism, but whole 
classes have never been known to abdicate their rule and surrender their 
privileges for the mere sake of social justice. 

The Socialist party desires the workers of America to take the economic 
and political power from the capitalist class, not that they may establish 
themselves as a new ruling class but in order that all class divisions may be 
abolished forever. To perform this supreme task the workers must be 
organized as a political party of their own. They must realize that both the 
Republican and Democratic parties are the political instruments of the 
master class. 

A true political party of labor must be founded upon the uncompromising 
demand for the complete socialization of the industries. That means doing 
away with the private ownership of the sources of wealth production and 
distribution, abolishing workless incomes in the form of profits, interest or 
rents, transforming the whole able-bodied population of the country into 
useful workers, and securing to all workers the full social value of their work. 

The Socialist party is such a political party. Its purpose is to secure 
a majority in Congress and in every state legislature and when in power to 
transfer to the ownership by the people of industries, beginning with those of 
a public character, such as banking, insurance, mining, transportation and 
communication as well as the trustified industries, and extending the process 
to all other industries susceptible of collective ownership, as rapidly as their 
technical conditions will permit. The Socialist program advocates the 
socialization of all large farming estates and land used for industrial and 
public purposes as well as all instrumentalities for storing, preserving and 
marketing farm products. It does not contemplate interference with the 
private possession of land actually used and cultivated by occupants. 

The Socialist Party seeks to attain its end by orderly and constitutional 
methods so long as the ballot-box, the right of representation and civil 
liberties are maintained. Violence is not the weapon of the Socialist party 
but of the short-sighted representatives of the ruling classes who stupidly 
believe that social movements and ideals can be destroyed by brutal repres¬ 
sion. 

In 1921, the party passed a resolution instructing the executive 
committee to survey all radical and labor organizations in the country 
to determine their readiness to co-operate with the Socialists in 
political action “upon a platform not inconsistent with that of the 
party and on a plan which will preserve the integrity and autonomy 
of the Socialist party.” A gathering of various large labor organiza¬ 
tions including the machinists, the Amalgamated Clothing Workers, 
and others, various farm organizations, and the Farmer-Labor and 
the Socialist parties met in Cleveland in December, 1921. A motion to 


730 THE WORKER IN MODERN ECONOMIC SOCIETY 

establish one united party supported by all elements was defeated by a 
small majority. The convention voted to establish state conferences 
which would try to unify all radical and labor forces, whether by work¬ 
ing through the two old parties, or through such third parties as the 
Socialists and Farmer-Laborites. 

5. THE FARMER-LABOR PARTY 

a) THE LAUNCHING OF THE PARTY 1 

The Labor party came to Chicago and started its convention in 
Carmen’s Hall with six hundred delegates. These delegates could 
be analyzed into two main groups. One: Those from trade-unions or 
combinations of trade-unions. Two: Those from “Labor party 
branches.” 

It does not follow, though, that the membership of the “Labor 
party branches” is a political duplication of the membership of the 
Labor party’s affiliated trade-unions. The unionist whose union 
has joined the Labor party may be a Republican or Democrat. 
And the unionist who joins a “Labor party branch” may come from 
a union which rejects the Labor party and all its works. The two 
memberships—“branch” and “union”—overlap but are not by any 
means the same. 

All “branches”—in Illinois, at least, which is the source and center 
of the present Labor-party going effort—are supposed to pay regular 
dues at a given rate per member. So are all affiliated unions. 

The delegates of the Labor party at Chicago were two-thirds of 
of them from Illinois and Indiana. The emphatic majority of all 
the delegates in the Labor party convention seemed to come directly 
from individual trade-union locals. 

It is apparently through a conquest of individual locals that the 
Labor party must come—if it does come—to a conquest of the trade- 
union movement of America. 

The United Mine Workers of America, in full national convention 
last year, instructed their national officers definitely to proceed to the 
formation of a Labor party. Nevertheless, the national officers of 
the United Mine Workers were not present at Chicago. Many locals 
of the United Mine Workers were present through delegates—sent 
at the expense of those locals. The rule is that the affiliated unions 
of the Labor party are locals of national unions, while the national 
officers of those same unions stand aloof with Mr. Gompers. 

Adapted with permission from William Hard, “Christensen, and Back of 
Him,” New Republic ^(August 4, 1920), pp. 273-76. 


LABOR IN POLITICS 


731 


In any case, however, the first fight before the Farmer-Labor party 
is the attempt by the Labor party element in it to convince and conquer 
the national trade-union organizations of the United States. The 
next is the attempt to strengthen and enlarge the relations which at 
Chicago were surprisingly favorably established with groups of 
farmers. The third is the vitally necessary attempt to expand the 
meaning of the word “Labor’’ and to teach a certain great mass of 
salaried people that only by entering into the spirit and into the body 
of Labor can they ever emancipate themselves brom being financially 
the most insulted and morally the most abject and groveling group 
in the community. Their circumstances do not incline them toward 
organization in trade-unions. The hope is entertained that their 
interests will lead them into harmony with the trade-unions through 
organization in Labor-party branches. 

b) PLATFORM OF THE PARTY 1 

All power to govern this nation must be restored to the people. 
This involves industrial freedom, for political democracy is only an 
empty phrase without industrial democracy. The invisible govern¬ 
ment of the United States maintains the two old parties to confuse 
the voters with false issues. 

1. 100 per cent Americanism: Restoration of civil liberties and 
American doctrines and their preservation inviolate, including free 
speech, free press, free assemblage, right of asylum, equal opportunity, 
and trial by jury. 

2. Abolish Imperialism at Home and Abroad. 

3. Democratic Control of industry: The right of labor to an 
increasing share in the responsibilities and management of industry; 
application of this principle to be developed in accordance with the 
experience of actual operation. 

4. Public Ownership and Operation: Public ownership and oper¬ 
ation, with democratic control, of all public utilities and natural re¬ 
sources. 

5. Promotion of Agricultural Prosperity. 

6. Government Finance: We are opposed to consumption taxes 
and to all indirect taxation. We favor steeply graduated income 
taxes, exempting individual incomes amounting to less than $3,000 
a year. In the case of state and local governments we favor taxation 
of land value, but not of improvements or of equipment, and also 
sharply graduated taxes on inheritance. 

1 Taken with permission from the Nation , Vol. CXI, No. 2886 (October 27, 
1920), p. 476. 


732 


THE WORKER IN MODERN ECONOMIC SOCIETY 


7. Reduce the cost of living. 

8. Justice to the Soldiers. 

6. THE DEVELOPMENT OF POLITICAL ACTION AMONG 

THE FARMERS 

a) THE NON-PARTISAN LEAGUE IN I918 1 

Whatever personal aspiration may have entered into its inceptions 
or its political development, the Nonpartisan League is distinctly the 
product of economic grievances. The prices of the things which the 
North Dakota farmer had to sell were determined at Minneapolis 
or St. Paul, at Duluth or Chicago; the grain elevators were in outside 
hands, and there was discrimination in railway rates. Speculation 
arbitrarily depressed the prices of the only products which the farmer 
had to sell, and as arbitrarily raised the prices of everything that he 
was obliged to buy; and the farmer was helpless. 

In order to emancipate the farmer and give him control of his 
own business, it was decided to begin the elimination of the middleman. 
In the election of 1914, 83 per cent of the vote was cast in support 
of a proposition for the establishment of state-owned terminal ele^ 
vators; but the Legislature rejected the proposal. Then the farmers 
organized. In the June Primary of 1916 the League polled more votes 
than all the other parties put together; and in the fall it elected all 
but one of the state officers, a large majority of the House, and eighteen 
out of twenty-five members of the Senate. Half of the Senators held 
over, however, and the Senate was able to defeat the plans of the 
League. The next two years were spent in perfecting and extending 
the organization, with the result that in November, 1918, the League 
swept the state. 

Meantime the program of reform had widened. Something more 
than state-owned grain elevators, it was perceived, was needed in 
order to eliminate the middleman; and the elimination of the middle¬ 
man, even if that were accomplished, was only one of the steps in 
the large process of agrarian emancipation. The platform on which 
members of the League were elected last November [i.e., 1918] calls for 
state-owned terminal elevators, flour mills, and cold storage plants, with 
an industrial commission to supervise their operation; a state bank 
with a capital of $2,000,000, in which all state funds will be deposited, 
and which, besides doing the usual banking business, will make the 

1 Taken with permission from William McDonald, “North Dakota’s Experi¬ 
ment.” Nation. CVII, No. 2803 (March 22. 1919), 420-21. 


LABOR IN POLITICS 


733 


first-mortgage farm loans at a low rate; a state building association 
empowered to erect dwellings for farmers and industrial workers, 
payment to be made on an amortization plan; state hail insurance, 
a matter of peculiar importance in the prairie states; workmen’s 
compensation, an improved initiative and referendum, and an attack 
upon speculative land-holding through the exemption of improvements 
from taxation. A series of constitutional amendments to enable 
the state to undertake these various public services was approved by 
overwhelming popular votes at the last election; the amendments 
have since been ratified by the Legislature; and the larger part of the 
legislation called for is ready on the statute book. 

The League is a political organization outside of and wholly 
disassociated from any party or parties, yet at the same time formulat¬ 
ing a platform, pledging to its support the candidates of any or every 
party who are willing to accept it, and supporting those candidates 
at the polls with such impartiality that the controlling majority 
which the League now holds in the Senate and House is in each case 
made up of both Republicans and Democrats. The League is an 
inner circle, a wheel within a wheel, a power behind the throne, 
ruling—and with an iron hand—through the agency of party organ¬ 
izations for whose political acts, as organizations, in general it dis¬ 
claims responsibility and professes entire indifference. 

It seems inevitable that the League, particularly now that it 
has existence in thirteen states and seems destined to become increas¬ 
ingly a national political force, should abandon its policy of indirection 
and assume the form as well as the substance of a national political 
party. 

Even more suggestive than the future of the League as a party 
is the theory of the organization of society for political purposes 
which the League embodies. The League is exclusively an organiza¬ 
tion of farmers. No one who is not a bona fide farmer can be a regular 
member of it. That is to say, it is a class organization, and the fact 
that some 85 per cent of the people of North Dakota are farmers 
does not change its essential class character. By securing the accept¬ 
ance of its programme by the organized labor forces of the state, it 
has united in common political action two occupational groups, but 
without interfering with the party cleavages which existed in each 
group. It stands ready to cooperate with any other group of work¬ 
ers—bankers, lawyers, teachers, tradesmen—that may choose to 
organize for political action and that is willing to accept the League’s 


734 


THE WORKER IN MODERN ECONOMIC SOCIETY 


programme. What North Dakota has, in other words, is the begin¬ 
nings of a Soviet government, in which bona fide representatives of the 
“toiling masses” unite in the direction of affairs, but without abandon¬ 
ing their party differences. The fact that the Soviet idea is here 
applied to a commonwealth rather than to a municipality does not 
alter the general nature of the scheme. 

b) NOVEL FEATURES OF THE LEAGUE 1 

The concrete proposals of the League do not, in fact, explain the 
movement. The vital thing was the creation and the existence of 
the organization itself. Regarded as a political party, the League 
is one in which every member is a contributor and to which all con¬ 
tribute equally. It is a party which, foregoing the conventional 
methods of levying large contributions on those wealthy individuals 
and corporations wishing to court the favor of the party and the 
officials whom it may select, and of making candidates pay for the 
offices to which they may be elected, goes directly to its ordinary 
membership for all its budget of expenses. It is probably the only 
political organization which ever adopted commercial methods of sales¬ 
manship by solicitors working on salary and commissions for enrolling 
its membership. 

The League idea has not been merely “taken up” by the north¬ 
western farmers. It has been “sold” to them. Practical salesman¬ 
ship, a program of immediate and forceful action and the use of the 
Ford automobile are the factors principally explaining the rise of the 
Non-Partisan League. “An idea, a Ford and sixteen dollars” built 
the Non-Partisan League, Townley himself has said. 

c) THE LEAGUE IN ECLIPSE (1921): A FRIENDLY VIEW 2 

At this writing the recall in North Dakota, directed against the 
Non-Partisan League state administration, appears in the main 
successful. Governor Frazier is recalled by a narrow margin and with 
him the Attorney General, William Lemke, member of the National 
Executive Committee of the League, and John Hagan, farmer and 
Commissioner of Agriculture and Labor. The initiative measures 
designed to repeal the industrial program of the League were however 
defeated. 

i 

1 Taken with permission from H. E. Gaston, The Non-Partisan League, pp. 6-7. 
(Harcourt, Brace & Co., 1920.) 

2 Adapted with permission from article by Oliver S. Morris, Editor of the Non- 
Partisan Leader in the Nation (November 9, 1921), pp. 535-36. 


LABOR IN POLITICS 


735 


The reasons for the overturn are not far to seek. The program 
of the League was prevented from being put into effect for a number 
of years by the opposition of “hold-over” senators, referendum 
elections, attacks in the courts on their constitution, and the boycotting 
of the state bonds by financial interests. Thus the present recall 
campaign found the League program in its principal parts inoperative 
after nearly seven years of fighting and sticking by the farmers. 
The farmers were discouraged and disappointed. 

In the meantime the state had had repeated crop failures or near 
ones and the after-the-war deflation had hit the farmers first and worse 
than any other industry. The independents promised to give the 
mill and elevator projects a fair trial, and to give the state a conserv¬ 
ative business administration which would restore state credit and 
prosperity. 

Whatever happens to the League as such, the great farmer move¬ 
ment which started fifty years ago and of which the League was 
one aspect will go on, modified and made more virile by the League’s 
ideas and methods. To get office in North Dakota the Independents 
had to promise to give some of the main features of the League 
program a trial. Other parties and politicians will have to make the 
same promises. 

7. PRESENT ARGUMENTS FOR AND AGAINST INDE¬ 
PENDENT POLITICAL ACTION 

a) WHY A LABOR PARTY ? 1 

In the past the relation of the American laborer to his employer 
and his employer’s business was vastly more important to him than 
his relations to the government. Although the state frequently 
interfered in industrial controversies and almost always to the dis¬ 
advantage of the wage-earner, the state was not his worst enemy, 
nor was its friendship indispensable. The wage-earner was struggling 
tenaciously to maintain himself against the powerful employers’ 
organizations and against the competition of a constantly increasing 
volume of European immigration. He was not strong enough to 
put up a political as well as an industrial fight and unless he selected 
his ground prudently and paid careful attention to the economic 
stamina of his union associates he was in danger of suffering a complete 
defeat. Under such conditions the American Federation of Labor 

1 Adapted with permission from an article in the New Republic , April 26,1919. 


736 THE WORKER IN MODERN ECONOMIC SOCIETY 

may have been justified in eschewing politics and in concentrating 
its attention on organizing the skilled trades and fighting exclusively 
for the increased economic power of its own limited membership. 
During the last few years these conditions have changed. The 
American Federation of Labor is no longer the harried and almost 
outlawed organization that it was for so many years. The federal 
government recognized it during the war and asked its cooperation 
in organizing the production of the necessary volume of war supplies. 
Immigration has ceased and will not return to its former volume. 
The wage-earning class won a substantial increase in economic power 
and independence. The government interferes in all considerable 
industrial controversies, and this interference has only begun. When 
the wage-earners demand union recognition, a universal eight-hour 
day, a national minimum of health and security and the nationaliza¬ 
tion of the railroads and the coal mines, they are putting forth a 
program with political aspects whose fulfillment will depend in the 
end upon their ability to exercise political power. 

They cannot trust the job to the Republican and Democratic 
parties. Both of the older parties are committed by the instinct of 
self-preservation to keep political and economic power in the safe 
custody of its present possessors. By forming a labor party they 
will at once clarify their own program, deposit it on the table for nation¬ 
wide and serious political discussion, and assume the responsibility 
of adjusting the program to that of the other economic classes. The 
political effort of organizing a Labor party will tend to nationalize 
the American labor movement. It will force the trade-unionists to 
seek the assistance of the unskilled workers, of the increasing body 
of co-operators and of the minority of brain workers who wish to 
share the aspirations and would like to contribute to the success of 
their brothers-in-labor. But above all it will force them to adjust 
their program to that of the discontented farmers who form such a 
large part of the American electorate and whose own economic 
grievances the political parties have so often smothered. A national 
Labor party which emphatically repudiates revolutionary socialism 
and which commits itself to an experimental program of industrial 
and agrarian cooperative democracy, re-enforced by democratic com¬ 
munity organization and so far as necessary by direct trade-union 
action, has become a necessary and a salutary agency of American 
social progress. 


LABOR IN POLITICS 


737 


b ) THE VIEW OF THE OPPOSITION 1 

In the last few weeks in Chicago, New York City, and two or 
three places the labor movement has expressed itself through the 
central bodies in favor of the formation of a political labor party. 

The purpose of my asking that we meet this afternoon is to 
present to you some facts upon that subject. 

We had in the late 6o’s and early 7o’s a fairly growing labor move¬ 
ment of some trade unionists in a federation called the National 
Labor Union. That organization inspired activity among the workers 
and then called a national convention for the purpose of nominating 
a president of the United States.' It nominated Justice Davis of the 
Supreme Court as its candidate for president, and then adjourned and 
never met again. The trade unions then fell off in membership until 
the organizations became very weak and ineffective. Labor was in a 
most deplorable condition, without opportunity for defense and robbed 
entirely of any power to press forward its rightful claims. 

In 1885-86, after a few years of precarious early existence, the 
American Federation of Labor tried to build up and extend its influence 
and organize the workers into their unions and declared for the intro¬ 
duction of the eight-hour work day, May 1, 1886. The movement 
gained great impetus and large advantages followed, but on May 
2 or 3, 1886, a bomb was thrown at a meeting which was being held 
at Haymarket Square, Chicago, which killed and maimed more than 
20 policemen. The meeting was supposed to have been held in the 
interest of the eight-hour movement. The wrath of the people which 
was aroused against those in charge of the Haymarket meeting gave 
the eight-hour day a severe blow and set-back. The eight-hour 
movement as such was destroyed for the time being. 

Due to the resentment of the workers because they had lost so 
much that they could have obtained and, due to certain local condi¬ 
tions, political rather than economic, in various cities the local move¬ 
ment undertook political campaigns and organized a political party 
in Chicago, Milwaukee, St. Louis, Boston, and New York, This 
resulted in the organized labor movement of New York City launching 
into a campaign which nominated Henry George as mayor of the city. 
It was my privilege to enter into that campaign to the very best of 

1 Adapted from an address by Samuel Gompers delivered in New York and 
published in Hearings, Committee of Education, U.S. Senate, on Senate Res., 
311, January 4, 1919- 


733 THE WORKER IN MODERN ECONOMIC SOCIETY 


my ability. Henry George received 68,000 votes and came very 
near election. 

After the campaign closed and the election was held, the movement 
took on another phase. It was called the Progressive Labor Party. 
They admitted to membership not only the men of organized labor 
but what had popularly been called by a great many the “brain 
with brawn” or “brain with labor.” The campaign was carried on 
with such scandalous results that nearly all the men of labor who had 
some self-respect had to hold themselves in the background for fear 
that they might be besmirched with the incidents which occurred in 
the campaign. 

The fact is that an independent political labor party becomes 
either radical, so called, or else reactionary, but it is primarily devoted 
to one thing, and that is vote getting. Every sail is trimmed to the 
getting of votes. The question of the conditions of labor, the question 
of the standards of labor, the question of the struggles and the sacrifices 
of labor to bring light into the lives and the work of the toilers—all 
that is subordinated to the one consideration of votes for the party. 

Which movement, economic or political, in any country on the face 
of the globe has brought more hope and encouragement, more real 
advantage, to the working people than the trade-union movement of 
America has brought to the wage earning masses of our country ? 

The organization of a political labor party would simply mean the 
dividing of the activities and allegiance of the men and women of 
labor between two bodies, such as would often come in conflict. 

In our movement we have done some things. There are nearly 
4,000,000 of organized trade unionists in the United States. 

I ask that the trade-union movement be given its fullest opportu¬ 
nity for growth and development so that it may be the instrumentality 
to secure better and better and better and constantly better con¬ 
ditions for the workers of our country. It is not true, as some carping 
critics allege, that the American Federation of Labor is a nonpolitical 
organization. We have secured from the Government of the United 
States the labor provision of the Clayton antitrust law, the declaration 
in the law that the labor of a human being is not a commodity or 
article of commerce. In that law we have secured the right of our 
men to exercise functions for which, under the old regime our men 
were brought before the bar of justice and fined or imprisoned. We 
have secured the eight-hour workday, not only as a basic principle 
but as a fact. We have secured the seamen’s law, giving to the seamen 


LABOR IN POLITICS 


739 


the freedom to leave their vessels when in safe harbor. The seamen 
of America are now free men and own themselves. We have secured 
a child-labor law, and although it has been declared unconstitutional, 
we are again at work to secure a law for the protection of our children. 
Our organized free existence to function and to express ourselves is 
now practically unquestioned. 

Suppose in 1912 we had had a labor party in existence; do you 
think for a moment that we could have gone as the American labor 
movement to the other political parties and said: “We want you to 
inaugurate in your platform this and this declaration.” If one of 
the parties had refused and the other party consented and took its 
chance, would the American Federation of Labor have been permitted 
to exercise that independent political and economic course if the labor 
party had been in existence ? How long would we have had to wait 
for the passage of a law by Congress declaring, in practice and in 
principle, that the labor of a human being is not a commodity or an 
article of commerce—the most far-reaching declaration ever made 
by any government in the history of the world. 

PROBLEMS 

1. Why has the labor movement gone into politics in Europe ? 

2. How do you account for the great increase in Socialistic sentiment 
abroad ? 

3. Why did the British labor movement set up a separate labor party? 
What are its policies ? Does it admit other than unionists ? 

4. What was Chartism? Why should the workmen of England who 
wanted social and economic reform put forward purely political 
demands ? Why were not the demands of the Chartists granted at the 
time? Why have practically all since been granted? Would the 
Chartist leaders be surprised at the small amount of change the granting 
of the charter has caused?” 

5. “There is a great parallelism between the British labor movement of 
the eighties and the American labor movement of today.” What 
are the similarities and differences ? 

6. Compare the political aims and methods of the British Labor Party, 
the American Federation of Labor, and the American Socialist Party. 
To what extent do their purposes determine their methods ? 

7. Could the industrial wage-earners secure political control without 
combining with other sections of the population ? Why or why not ? 
What other sections would be most likely to combine with the industrial 
workers ? 


V 


740 


THE WORKER IN MODERN ECONOMIC SOCIETY 


8 . To what extent are the interests of the farmers of the country similar to 
those the of urban workmen and to what extent are they opposed? 
To what extent are the interests of the lower salaried groups common 
with those of the wage-earners; the small merchants, etc.? Why? 
Be specific. 

9. To what extent is it possible for the state to be neutral in industrial 
disputes, as Mr. Gompers seems to want it to be ? Does he really want 
it to be neutral? Why? 

10. To what extent would the formation of a labor party “ split the pro¬ 
gressive vote” and enable the more conservative candidates to win? 
Would this be true under proportional representation? To what 
extent would the formation of such a party disrupt the unions by 
introducing matters upon which the members could not agree? To 
what extent would it draft energy from the economic struggles of labor ? 
ri. What is the difference in the political methods of the A.F. of L. and the 
Non-Partisan League? Is this more effective than forming a third 
party ? Why or why not ? 

12. What is the Farmer-Labor Party ? How does it differ from the Socialist 
Party ? 

13. “The Farmer-Labor Party should merge with the Socialist Party.” 
Discuss. 

14. Is a labor party a “class party”? What is a class party? Are other 
parties class parties ? 

15. What have the workers to gain by political action anyway ? 

16. Why do the I.W.W.’s object to political action ? 

17. To what extent has the fact that the United States is a federal union 
of 48 states retarded the political efforts of labor and why ? What 
has been the effect of the great power wielded by our courts upon 
these efforts and why ? 

REFERENCES FOR FURTHER READING 

Carroll, Mollie R., Labor in Politics 

Kellogg and Gleason, British Labor and the War 

Gleason, Arthur, What the Worker Wants 

Laidler, H. W., Socialism in Thought and Action 

Walling, Stokes, Hughan, Laidler, The Socialism of Today 

Hunter, Robert, Labor in Politics 

Hillquit, Gompers, and Hayes, The Double Edge of Labor's Sword 
Henderson, Arthur, The Aims of Labour 


PART SIX 

THE EMPLOYER’S APPROACH 


























































, t 




. 









INTRODUCTION 


It should not be thought that the workmen have been the only 
group to deal with their problems in an organized way. The employ¬ 
ers by the very fact that they superintend the conduct of industry are 
compelled to adopt labor policies of some sort. We do not have 
the space to describe here the various ways in which the employers 
have gone about meeting their problems but we have selected four 
important methods and agencies, namely employers’ associations, 
employee representation, various methods of wage payment and 
scientific management, and profit-sharing. If one works thoroughly 
through these measures he will acquire an appreciation of the issues 
which face employers and the effect which the actions of the employers 
have in turn upon the wage-earners. Many of the questions with 
which employers have come increasingly to concern themselves of late 
years, such as the selection and training of workmen, welfare measures, 
experiments with hours, etc., have been necessarily omitted because 
of lack of space. 


I 


✓ 


743 


CHAPTER XXIV 


EMPLOYERS’ ASSOCIATIONS AND JOINT 
REPRESENTATION 

A. Employers’ Associations 

i. THE PURPOSE OF EMPLOYERS’ ASSOCIATIONS 1 

The associations exist because of the institution of private property 
in the means of production. The control over the equipment by the 
employer inevitably carries with it a degree of control over the lives 
of the workmen. The employer desires to maintain control over 
his increasing equipment, but the workmen oppose this. Concessions 
to the unions of workmen have not generally lessened but rather have 
increased their desire for ever greater control, for instance the demand 
for a voice in the management of the business. Their demands 
threaten to extend even to complete control—which means either a 
transfer of property from one owner to another, or the abolition of 
private property in productive equipment. 

Without aid from fellow employers, an employer can rarely long 
withstand the great power of the federated unions, once it is directed 
against him. In bargaining ability the unions have specialists long 
trained in meeting every type of employer. In knowledge of wages, 
labor supply and demand, the union officials again have the great 
advantage. The great majority of “independent” employers find 
themselves helpless when confronted by a grafting business agent 
of a powerful union. In strikes, the average or ordinary employer 
is a novice, the union officials are experts with long and varied experi¬ 
ence, since they spend all their time at such matters while the employer 
must generally devote much of his time to problems other than labor 
matters. The employer knows little of the tactics or strategy in 
the conduct of strikes—publicity, legal remedies, such as injunctions, 
the building up of a body of workmen not susceptible to union prop¬ 
aganda and similar weapons. It is this lack of knowledge and means 
that sometimes leads an “ independent ” employer verging on bank¬ 
ruptcy to take indiscreet steps which alienate public sympathy 

1 Adapted with permission from Clarence E. Bonnett, Employers' Associations 
in the United States, pp. 15-16, 18-20. (The Macmillan Co., 1922.) 


744 


ASSOCIATION AND JOINT REPRESENTATION 


745 


entirely from his cause. Generally a hardfought strike results in a 
boycott. What can an employer alone do to withstand a nation-wide 
boycott ? He may appeal to the courts but he must employ a counsel 
well-versed in such matters and pay a large fee. He must have the 
evidence collected, but this can be done only at great expense. Unless 
he does secure all this evidence for the trial, the union may convince 
the court and jury that no formal boycott had been declared and that 
the union had exercised only the “right” to inform its members that 
the employer had a strike on in his shop, and that there had been no 
conspiracy to ruin his business. He may buy peace from the unions 
by repeated concessions, if the concessions do not bankrupt him, 
especially when he has to compete with employers who are organized 
and so do not make concessions. He cannot successfully oppose the 
enactment of legislation that will adversely affect his interests, nor 
obtain legislation he desires. The prudent employer anticipates 
ultimately some labor trouble and guards against it, as best he may, 
by uniting with an association in his industrial field, or with a special 
or a general association, and perhaps with all three. Modern condi¬ 
tions apparently involve continual labor troubles, and so conduce to 
continuous organizations of employers, hence the permanent formal 
employers’ association. When labor troubles become chronic, 
employers’ associations become formal and permanent. 

2. TYPES OF EMPLOYERS’ ASSOCIATIONS 1 

The period from 1885 to 1920 may be divided into three stages: 
(1) the beginning of national employers’ associations; (2) the develop¬ 
ment of negotiatory associations at its height; (3) the growth of 
belligerent associations. Certain associations may be selected for 
study as typical of the movement. The Stove Founders’ National 
Defense Association has been selected as a national negotiatory 
organization. It is a centralized body and bargains with the Inter¬ 
national Molders’ Union on a national scale, but deals with labor 
troubles and strikes through both district and national committees. 
The National Founders’ Association is a national belligerent organiza¬ 
tion. It has a regular organization for combating strikes, and 
conducts a propaganda against closed-shop unionism in order to 
prevent strikes. Its powers are also centralized. The National 
Metal Trades Association is a close-knit federation, national in scope 

1 Adapted with permission from Clarence E. Bonnett, Employers' Associations 
in the United States, pp. 21, 32-33. (The Macmillan Co., 1922.) 


746 THE WORKER IN MODERN ECONOMIC SOCIETY 

and belligerent in attitude. It combats strikes largely through its 
branches. It seeks to prevent strikes and conducts a propaganda 
for this purpose. The National Erectors’ Association is clearly the 
most belligerent national association in the United States. It makes 
war upon unionism from every side. The Building Trades Employers’ 
Association of New York and the Building Construction Employers’ 
Association of Chicago are both local federations of other associations 
that bargain with the unions and fight occasionally in order to carry 
on negotiations without making too many concessions. The former 
is noted for its methods of handling labor difficulties, part of the 
time with a General Arbitration Board. The latter association is 
noted especially for its “uniform form of agreement” as a means 
designed to reduce sympathetic strikes and other labor troubles. 
The United Typothetae of America presents an illustration of an 
organization divided against itself in labor matters with two divisions, 
one negotiatory, the other belligerent. It is a large national federation 
which, as a unit, concerns itself primarily with trade conditions in 
the printing industry. The American Newspaper Publishers’ Associ¬ 
ation has a labor division which has standardized national trade agree¬ 
ments and arbitrates issues that arise under these. It is accordingly 
a national negotiatory body. The National Association of Manu¬ 
facturers is a national centralized belligerent propaganda association, 
primarily engaged in opposing legislation sought by the American 
Federation of Labor. The National Civic Federation is a national 
mediatory association, made up of three groups: employers, union 
officials, and publicists. It attempts by means of conferences to 
promote amicable relations between employers and union officials. 
The League for Industrial Rights is a national organization that makes 
war upon the unions for their illegal practices. It aims to collect 
and disseminate information on the legal phases of the conflict and on 
other developments in industrial relations. The National Industrial 
Conference Board is a loose federation of national and state industrial 
associations for the investigation and discussion of vital problems as a 
basis for united action in combating “union fallacies” and proposals 
based thereon. The Associated Employers of Indianapolis is a local 
belligerent association which has become of national significance 
through its nation-wide propaganda against the closed shop, and its 
efforts to co-ordinate all the local open-shop employers’ associations 
in the United States. 


ASSOCIATION AND JOINT REPRESENTATION 


747 


3. THE NATIONAL FOUNDERS’ ASSOCIATION 1 

Should all efforts to adjust the difficulty fail and a strike occur, 
the Association usually secures workmen to operate the struck shop. 
The ordinary method of operation has been to employ a few good 
molders at the plant struck, to fill the balance of the floors with green 
men recruited from the locality in which the shop is located, and to 
have an instructor teach them molding. The Association keeps 
regularly in its employ under yearly contract a limited number of 
high-grade molders and coremakers, who work in normal times in the 
shops of some of the members, but in case of a strike are ready to go 
where the Association directs and to instruct the green hands how to 
do special kinds of molding. Molding machines are also installed 
and operated by relatively unskilled men, who are taken from other 
jobs in the shop, or secured through the Association’s labor bureaus. 
This system was inaugurated in 1904, and has proven to be a highly 
effective method of combating strikes. This system makes it wholly 
unnecessary for the struck employer ever to employ any of the strikers; 
in fact, the usual procedure is for the employer to refuse to have any 
more dealings whatever with the more radical men who strike in his 
shop. This action contributes much to the prevention of another 
strike soon, as the shop is thus “ cleaned” of union men. Moreover, 
the employer is required by his contract with the Association to 
maintain an open shop for one year after conditions become normal 
in his shop following strike. 

4. THE NATIONAL METAL TRADES ASSOCIATION 2 

The National Metal Trades Association was organized in 1899 
on a similar basis to that of the Stove Founders National Defense 
Association and the National Founders Association. It concluded an 
agreement with the International Association of Machinists in 1900 
but trouble between the two organizations soon developed and in 1901 
the agreement was abrogated and the association adopted the follow¬ 
ing set of principles to which they have ever since adhered. 

“Concerning Employees. 1. Since we, as employers, are respon¬ 
sible for the work turned out by our workmen, we must have full 
discretion to designate the men we consider competent to perform 

1 Adapted with permission from Clarence E. Bonnett, Employers’ Associations 
in the United States, pp. 74-75. (The Macmillan Co., 1922.) 

2 Prepared. 


748 THE WORKER IN MODERN ECONOMIC SOCIETY 


the work and to determine the conditions under which that work 
shall be prosecuted, the question of the competency of the men being 
determined solely by us. While disavowing any intention to inter¬ 
fere with the proper functions of labor organizations, we will not 
admit of any interference with the management of our business. 

“Strikes and Lockouts. 2. This Association disapproves of strikes 
and lockouts in the settlement of industrial disputes. This Association 
will not countenance a lockout, unless all reasonable means of adjust¬ 
ment have failed; neither will the members of this Association deal 
with striking employees as a body. 

“Relations of Employees. 3. Every workman who elects to work 
in a shop will be required to work peaceably and harmoniously with 
all his fellow employees, and to work loyally for the interests of his 
employer. 

“Apprentices , etc. 4. The number of apprentices, helpers and 
handymen to be employed will be determined solely by the employer. 

“Methods and Wages. 5. We will not permit employees to place 

any restriction on the management, methods or production of our 

\ 

shops, and will require a fair day’s work for a fair day’s pay. 

“Employees will be paid by the hourly rate, by premium system, 
piece work or contract, as the employers may elect. 

“Freedom of Employment. 6. It is the privilege of the employee 
to leave our employ whenever he sees fit, and it is the privilege of the 
employer to discharge any workman when he sees fit. 

“Concerning Disagreements. 7. The above principles being abso¬ 
lutely essential to the successful conduct of our business, we cannot 
permit the operation of our business thereunder to be interfered with. 
In case of disagreement concerning matters not covered by the 
foregoing declaration and not affecting the economic integrity of the 
industry, we advise our members to meet such of their employees who 
may be affected by such disagreement and endeavor to adjust the 
difficulty on a fair and equitable basis. 

“8. In the payment of hourly wages or in the operation of piece 
work, premium plan, or contract system, this Association will not 
countenance any conditions of wages which are not just, or which 
will not allow a workman a fair wage in proportion to his efficiency. 

The Association lists approximately 1,000 manufacturers as 
members. It has twenty-four branches which are largely autonomous. 
Members pay dues to the Association and are also subject to special 
assessments. Each of the branches has an employment department 


ASSOCIATION AND JOINT REPRESENTATION 


749 


as has the national office as well. The names of tens of thousands of 
workmen are here listed with fairly complete data on their records. 

The Association tries to prevent strikes and offers its advice and 
services to members for that purpose. When a strike breaks out it 
furnishes men and money to break it while it also supplies guards if 
needed. One of its pamphlets declares “that in case of labor difficulty 
the Association brings to your assistance and financial and technical 
support a personnel and an equipment trained through years of 
experience and many strikes.” Professor Bonnett also says that it has 
a considerable number of under-cover men who keep it informed 
about union plans and policies. 

One of the most notable of its recent contests with the unions 
was that in Cincinnati in 1920 when over one hundred plants in the 
machine-tool industry were involved. The five-months struggle 
finally resulted in a victory for the employers. One of the employers 
stated that “Without the assistance of the National Labor Trades 
Association it would have been impossible for us to have won out.” 
On another occasion an employer wrote “without your help we could 
not have started our plant.” The Association indeed is said by Pro¬ 
fessor Bonnett to boast that it has never lost a strike of any importance. 

The Association also maintains a safety inspection department 
and industrial education department which offers services to its 
members. With the National Founders Association it edits the 
Open Shop Review and it was one of the organizers of the National 
Industrial Conference Board. 

5. CONSTRUCTIVE SERVICES OF EMPLOYERS’ 

ASSOCIATIONS 1 

Associations of employers do not confine themselves to dealing 
with or opposing the unions. Many of them also serve as agencies 
to secure constructive accomplishments which would be impossible 
for individual employers to effect. Thus the United Typothetae has 
developed a standard cost-finding system for the printing industry, 
has devised and cairied out courses of apprentice training and has 
started schools to teach the various printing trades. Various associa¬ 
tions have taken up the question of apprenticeship and industrial 
education and the influence of the National Association of Manu¬ 
facturers was a potent factor toward the passage by Congress of the 
Smith-Hughes Act providing federal aid to the states for industrial 

1 Prepared. 


75° 


THE WORKER IN MODERN ECONOMIC SOCIETY 


education. The National Industrial Conference Board has become 
in the last five years one of the largest agencies for social research 
and has published many valuable studies. The various local chambers 
of commerce have collected and distributed information of consider¬ 
able value to their members and have served also as a means whereby 
the employees and merchants might work out a common policy on 
numerous social and political questions. 

B. Employee Representation 
6. ESSENTIAL NATURE OF WORKS COUNCILS 1 

The Works Council may be described as a form of industrial organ¬ 
ization under which the employees of an individual establishment , through 
representatives chosen by and from among themselves , share collectively 
in the adjustment of employment conditions in that establishment. It 
provides, in the individual establishment, an organized form of con¬ 
tact between the employer and his employees. 

The institution of the Works Council obviously involves acceptance 
by the employer of the principle of collective dealing. Under a plan 
of employee representation, questions previously settled between the 
employer and his employees individually are handled by represent¬ 
atives of the employees collectively, and, moreover, on a systematic 
basis. Recognition of the principle of collective dealing by the 
employees of individual establishments with their employer forms the 
very basis of the Works Council. Such collective dealing is, however, 
distinct from “collective bargaining” in the sense of collective dealing 
with labor unions as organizations. 

Distribution by size of establishment. —Works Councils are found 
in the smallest establishments and in the largest works of the big 
corporations of the country. The majority, however, are in establish¬ 
ments with a working force of over 500. The distribution of Works 
Councils with respect to size of establishment is shown in the following 
table: 2 

1 Adapted with permission from “Works Councils in the United States,” 
Research Report Number 21 (October, 1919), pp. 1-2, 15, 19-21, 57, 119-20. 
(National Industrial Conference Board, 15 Beacon Street, Boston.) 

2 For some of the large corporations operating several works it has not been 
possible to obtain a record of the number of workers employed in each works. Only 
the grand totals for all the works operated by each such corporation can, therefore, 
be given. The last group in the table is wholly made up of such grand totals; 
the second last group contains five such corporations. 


ASSOCIATION AND JOINT REPRESENTATION 

TABLE XCII 

Distribution of Works Councils by Size of 
Establishment 


Number of Employees 

Number of 
Establishments 

Total 

Less than 200. 

18 

2,000 

8 con 

200 to 500. 

26 

I C 

500 to 800. 

9,100 
6,200 
9,000 
24,200 
36,000 
39,000 
57,000 
190,400 

800 to 1,000. 

7 

1,000 to 1,500. 

/ 

8 

1,500 to 3,000. 

17 

I I 

3,000 to 5,000. 

5,000 to 10,000. 

7 

10,000 to 15,000. 

c 

15,000 and over. 

0 

8 


Total. 

122 

391,400 



It further appears from the above table that the establishments 
covered by the first seven groups, which total 102 in number, employ 
only 100,000 workers. The remaining 20 establishments, in contrast, 
employ nearly 300,000. 

Two principal types of works council .—Among the various plans 
of employee representation, two general types may be distinguished: 
(1) The “governmental” type; (2) the “committee” type. 

The Governmental Type: This type of Works Council, following 
the patterns of the United States Government, provides for a Cabinet, 
Senate, and House of Representatives, or sometimes for the latter 
two bodies only. It is often referred to as the “ Industrial Democracy ” 
plan. Under this plan the Cabinet comprises in its membership the 
higher executives of the plant, the Senate is made up of foremen, 
and the House of Representatives consists of elected representatives 
of the employees. 

The Committee Type: This type follows the ordinary committee 
form of organization, sometimes being a single committee and some¬ 
times comprising a hierarchy of committees. The committee or 
committees may consist of employees alone, who confer with represent¬ 
atives of the management, or they may be joint committees embracing 
in their membership representatives of both employees and employer. 

The basis of representation for these Councils is determined in 
a variety of ways. The employees in choosing their representatives 
may vote at large, by departments, floors, shops, or other natural 
or artificial sections of the plant, or according to crafts or occupation. 





















75 2 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The activities of Works Councils cover a wide range. They may 
include (i) the social and recreational life of the workers, (2) their 
living and working conditions, (3) the continuity of employment, 
and measures for increasing productive efficiency. 

Bargaining over working conditions, hours of labor and wages, 
has been a chief feature of the activities of most Works Councils. 
“Bargaining” questions are, in fact, so commonly included among the 
activities of Works Councils of every class that those organizations 
which do not include them have been designated in this report as 
“limited” plans. 

Ultimate settlement of matters failing of adjustment by the 
Works Council is provided for by compulsory arbitration in only 
a small minority of establishments. Ultimate power of settlement 
rests with officials or the board of directors of the company in only 
a few cases. The plans in effect in a majority of the establishments 
make no provision for further reference after the Works Council has 
failed to reach an agreement. Inasmuch as in the experience of 
Works Councils thus far, matters have seldom reached a deadlock, 
the means provided for the final determination of questions have 
been important chiefly from the standpoint of fixing the authority 
possessed by the individual Works Council. 

Relatively few plans qualify the right of employees to vote for 
members of the Works Council, other than that they must be in the 
employ of the company at the time of the election. A majority of the 
plans, however, require that employees must have certain qualifica¬ 
tions if they are to serve as employees’ representatives. The require¬ 
ment most often prescribed is that they must have been in the employ 
of the company for a fixed period, generally one year, preceding the 
election. In many cases American citizenship and the attainment 
of the age of 21 also are stipulated. The usual term of office is one 
year. 

7. AMERICAN EXPERIENCE WITH 
WORKS COUNCILS 1 

In August, 1919, there were 225 works councils in the country; by 
February, 1922, this number had increased to 725. Most of the “shop 
committees” established by the National War Labor Board, as well 
as those set up by the Shipbuilding Adjustment Board during the 
World War, have ceased to function. The explanation of this lies 

Adapted with permission from “Experience with Works Councils in the 
United States,” Research Report Number 50 (May, 1922), pp. 4-7, 9-12. (National 
Industrial Conference Board, Boston.) 


ASSOCIATION AND JOINT REPRESENTATION 


753 


in the fact that the committees were established in plants by order 
of an outside body and not through a desire on the part of employers 
and employees. Employers, as a rule, were opposed to this outside 
intervention and under such circumstances, the life of the “shop 
committees” could not be long. 

Another major point revealed by the investigation is that usually, 
when a Works Council is first installed in a plant, there is a tendency 
for employees to use it chiefly for presenting complaints and grievances. 
The feature of the plan that appeals especially to the workers is the 
opportunity it affords of obtaining a hearing and decision in cases 
where they think they are suffering an injustice. In a few instances 
this remained the principal use which the employees made of the 
Works Council plan, even after it had been in operation for a year or 
more. 

In times when wages were low and labor plentiful, the workers 
were naturally more concerned with retaining their jobs than with the 
correction of minor maladjustments in the plant and the committees 
lost their effectiveness even as a means for the hearing and adjustments 
of complaints and grievances. Moreover, the initiative in the choice 
of subjects with which the Works Council should deal was left entirely 
in the hands of the employees. When economic conditions imposed 
a restraint upon the readiness of employees to provide the work 
committees with subjects for discussion the committees became lifeless. 

As the Works Council became better understood, so most employ¬ 
ers reported, there took place a gradual decrease in the use which the 
employees made of the works committees for the presentation of 
complaints and grievances, and a corresponding increase in the interest 
which they manifested in general business conditions and plant 
efficiency. 

The extent to which employees take an interest in increasing 
productivity efficiency appears to be directly related to the extent to 
which they have confidence in the fairness of management in its 
dealings with them, and to the degree to which they are convinced 
that it is to their interest that production be maintained and efficiency 
kept up. 

An outstanding feature of the Conference Board’s investigation 
is the fact that proposals for wage reductions or changes in work-hour 
schedules made by employers have, in every instance of which the 
Board has learned, been approved and accepted by the employee 
representatives on the Works Councils, when they were furnished 
with an explanation of the reasons necessitating such measures. 


754 


THE WORKER IN MODERN ECONOMIC SOCIETY 


In practically every plant covered by the present investigation 
the effect of Works Councils upon relations between management 
and men was reported as beneficial. The improvement in the relations 
between management and men was attributed to the opportunity 
afforded by a Works Council for an employer and his employees to 
come into direct and intimate contact with each other and to learn 
each other’s views. 

Practically all employers reported that in the main very good 
judgment has been used by employees in their choice of representatives 
on Works Councils. Men with long service in the company’s employ, 
those of sound judgment, who were fair and impartial in their decisions, 
those who manifested a desire to assist management in the develop¬ 
ment of mutual understanding and goodwill—such were the type of 
men who had mostly been elected as employee representatives. 
In the first place, both management and men must be in favor of 
an employee representation plan as a means for the adjustment of 
their differences and for the betterment of their industrial relations. 

In the second place, it must be recognized that the machinery of 
any plan is but a means to an end; the desired objects will be 
accomplished only if there is present mutual confidence and whole¬ 
hearted support by those for whose benefit the plan is established. 

In the third place, one cannot fail to lay emphasis upon the 
importance of the manner in which a Works Council is introduced 
into a plant. The unanimous opinion of the Board’s correspondents 
is to the effect that a Works Council should not be established in a 
plant without giving the employees a voice in its formulation. The 
reason given for this is the belief that in this way any suggestion of 
paternalism or exploitation on the part of management is avoided. 

Finally, it must be realized that the employer who looks to the 
Works Council as a means of gaining the confidence and goodwill of 
his employees, cannot expect to secure these unless he gives the Works 
Council constant and sympathetic support. 

8 . EMPLOYEE REPRESENTATION PLAN FOR THE 
PLANTS OF SWIFT & COMPANY 1 

A. PURPOSE OF PLAN 

Swift and Company desires to provide means whereby its employes 
may co-operate more closely with the regular plant authorities and 
may, when desired, meet with the Management to discuss any matters 
affecting their mutual relations. 

Adapted with permission from Employes Representation Plan for the Plants 
of Swift 6° Company , pp. 3-12. July 20, 1921. 


ASSOCIATION AND JOINT REPRESENTATION 755 

The employes want to know more about the Company and its 
business; and Swift and Company wants to have a better understand¬ 
ing of the problems of the employes. This Plan aims to secure frank 
discussion of all difficulties and settlement through joint conference. 


B. RULES UNDER THE PLAN 
ARTICLE I 

BASIS OF REPRESENTATION 

The Basis of Representation shall be that the Employes and the 
Management of the Plant shall have equal representation at all times 
on all matters of mutual interest in about the following proportions :v 

Total Number „ 0ne Employe and One 

Employes Management Representative 

H y for Each 

Over 3,000. 200 Employes 

1,500 to 3,000. 150 Employes 

750 to 1,500. 100 Employes 

400 to 750. 75 Employes 

200 to 400. 40 Employes 

150 to 200. 30 Employes 


ARTICLE 11 
VOTING DIVISIONS 

In order that the different departments and employe interests of 
the Plant may be fairly represented, related departments shall be 
grouped into the number of Voting Divisions indicated in the published 
schedule for the Plant, and each Division shall be assigned one employe 
and one Management Representative. The Assembly shall change 
the Voting Divisions whenever necessary to secure complete and fair 
representations. 

ARTICLE III 

QUALIFICATIONS OF EMPLOYE VOTERS AND OF EMPLOYES’ 

REPRESENTATIVES 

1. With the exception of employes in the Superintendent’s office, 
department foremen, sub-foremen, clerks, and any such help represent¬ 
ing the Management, all employes on the pay roll of the plant shall 
be entitled to participate in the Plan and to vote for Employes’ 
Representatives. 

2. All employes eligible as Voters shall be eligible for nomination 
and election as Representatives provided they have worked in a 
department of their Voting Division for four months and for one year 
in the Plant immediately prior to the Election, are American citizens 
or have first papers, and are of legal age. 








756 


THE WORKER IN MODERN ECONOMIC SOCIETY 


ARTICLE IV 

NOMINATION AND ELECTION OF EMPLOYES’ REPRESENTATIVES 

1. Nominations and Elections of the persons above defined as 
Employes’ Representatives shall be by secret ballot. 

2. Nominations shall be made by taking a nominating vote in 
each Voting Division not more than four days before the date fixed 
for the election. 

3. On a blank ballot the employe shall write, or may have written 
for him by a fellow voter, the name of the person the employe desires 
to nominate. 

4. In each Voting Division the two persons receiving the highest 
number of votes shall be declared nominated. 

ELECTIONS 

5. Not more than four days after the nominations are posted an 
Election by secret ballot shall be held. 

6. At the Election the candidate receiving the highest number of 
Votes in the Voting Division shall be declared elected a member of 
the Plant Assembly and shall hold office for one year; except that 
six months after the first election half of the Employe Represent¬ 
atives shall be retired. These persons shall be determined by lot 
immediately after the first election but shall be eligible for renomina¬ 
tion and re-election. 

article v 

APPOINTMENT OF AND CHANGES IN MANAGEMENT REPRESENTATIVES 

Upon the election of Employe Representatives the Management will 
announce the appointment of the Management Representatives in 
the Assembly, whose number shall be the same as the number of 
Employes’ Representatives. They may be chosen from any section 
of the Plant or Office help which has supervisory duties, and they may 
be changed or have vacancies filled at the discretion of the Manage¬ 
ment. 

ARTICLE VI 

VACANCIES IN EMPLOYES’ ASSEMBLY REPRESENTATIVES 

1. If any Employes’ Representative leaves the service of the Plant 
or becomes ineligible for any of the reasons previously stated or is 
recalled or is absent from five consecutive meetings of the Assembly 
without being excused by the Assembly, his membership shall immedi¬ 
ately cease. 


ASSOCIATION AND JOINT REPRESENTATION 


757 


2. All vacancies among the Employes’ Representatives shall be 
promptly filled by special nomination and election conducted under 
the direction of the Assembly in the same manner as regular nomina¬ 
tions and elections. 

ARTICLE VII 

RECALL OF EMPLOYE REPRESENTATIVES 

1. If the services of any Employe Representative becomes unsatis¬ 
factory to the employes of the Voting Division from which he was 
elected, they may recall him if at least one-third of the Employes of 
the Voting Division ask in writing for his recall. A special election 
by secret ballot shall then be held in that Voting Division to decide 
whether or not such Representative shall be recalled. 

2. If a majority of the employes in the Division vote in favor of 
recalling him then his term of office shall immediately cease. 

ARTICLE VIII 

THE ASSEMBLY—ITS ORGANIZATION AND POWERS 

1. There shall be an Assembly meeting at the call of its Chairman 
and including all of the Representatives elected by the employes for 
the Voting Divisions indicated in the published schedule for this 
Plant. These Employes’ Representatives shall sit jointly with an 
equal number of appointed Representatives of the Management, and 
the two shall constitute the Assembly. 

2. Two persons in the employment of the Company, but not 
members of the Assembly and without voting power in it, shall be 
chosen by the Assembly as Chairman and Secretary, respectively, 
of the Assembly. 

3. The Assembly is not vested with executive or administrative 
authority but may review and discuss all cases and matters referred 
to it by its Committees or initiated by the Employes or Management 
Representatives concerning the mutual interests of employes and 
management, and may call for any desired information or evidence. 

4. The Assembly may include in such matters all cases, references 
or appeals relating to wages, hours, safety, buildings, plant equipment, 
sanitation, restaurants, dressing rooms, and like matters. 

5. When any decision of the Assembly, calling for action, obtains 
a two-thirds vote it shall be filed with the Management and shall 
have a binding effect on both Employer and Employes, unless within 
fourteen days the Board of Directors of the Company or the Employes’ 
Representatives request the Assembly to reopen the matter for further 
consideration. 


758 THE WORKER IN MODERN ECONOMIC SOCIETY 


6. When after such reconsideration in the Assembly it is deemed 
impossible to arrive at a collective agreement by joint conference on 
any one issue, the management and the employes are at liberty to 
take such action outside of the Plan as they may think desirable. 
But such action will not of itself terminate the general use of the Plan, 
which shall continue in full force so long as it is desired by Employer 
and Employe. 

7. A majority of the Employes’ Representatives, together with a 
majority of the Management Representatives, shall constitute a 
quorum; but at all meetings the voting power of the two shall be 
equal. 

8. The Assembly shall hold regular meetings at times fixed by it. 
Special meetings may be called on the authority of the Chairman. 

9. The Company shall provide at its expense suitable meeting 
places for the Assembly, its Committees and sub-committees. 

10. Employes serving as members of the Assembly shall receive 
their regular pay from their Employer during such absence from work 
as this service actually requires. 

11. The Assembly may prepare and distribute to the employes 
reports of its proceedings, and the expense thereof shall be borne by 
the Employer. 

12. The Rules governing this Plan may be amended by a two- 
thirds vote of the Assembly and the approval of the Management, 
notice of such proposed amendment having been given not less than 
four weeks and not more than six weeks before the amendment is 
voted upon. 

ARTICLE IX 

COMMITTEES OF THE ASSEMBLY—THEIR ORGANIZATION AND POWERS 

1. There shall be three Standing Committees of the Assembly: 
(a) on Assembly Procedure and Elections, ( b ) on Interpretations and 
for Adjustment of Disputed Plant Rulings, ( c ) on Changes in Working 
Conditions. The Assembly may appoint also additional Committees. 

2. Each Assembly Committee shall consist of equal numbers of 
Employes’ and Management Representatives who shall elect a 
Chairman and a Secretary. 

3. All action by a Committee shall be based upon the unanimous 
vote of those present. Upon failure of a Committee to agree on any 
matter referred to it, the Secretary of the Committee shall prepare 
a full statement of the facts and shall send it to the Secretary of the 
•Assembly for review and decision. 


ASSOCIATION AND JOINT REPRESENTATION 


759 


ARTICLE X 

RULES FOR USING THE COMMITTEES 

A. Committee on Assembly Procedure and Elections 

i. After the first nominations and elections herein otherwise 
provided for, the Standing Committee of the Assembly on Procedure 
and Elections shall handle all such matters, viz.: arranging details 
of nominations, supervising elections, providing tellers and certifying 
successful candidates to the Assembly and to the Management. 

B. Committee on Interpretations and for Adjustment of Disputed 

Plant Rulings 

1. The course to be followed in the settlement of any employe’s 
complaint or that of any group of employes shall be as follows: 

In no one case shall the Committee act until the regular plant 
authorities have been given an opportunity by the aggrieved party 
or parties to hear and adjust the issue. 

2. Where satisfaction is not obtained through the regular plant 
authorities, the employe or employes concerned may take the matter 
up with their elected Voting Division Representative who shall consult 
with the appointed Management Representative for the Division, and 
these, though without power to render a decision shall together seek to 
effect a settlement by mutual agreement of the parties. 

3. Failing a settlement by mutual agreement at the first stage, 
the joint Representatives for the Division concerned shall send the 
case for a decision to the Committee on Plant Rulings for their 
Section of the Plant, and failing a unanimous decision by the Sub- 
Committee, the case shall go to the Main Committee on Disputed 
Plant Rulings whose decision, if unanimous, shall be final; otherwise, 
the matter shall go to the Assembly for its action. 

C. Committee on Changes in Working Conditions 

1. All proposals to make any change in existing working conditions 
on the Plant, such as wages, hours, safety, sanitation, or involving 
buildings, equipment, facilities, or other conditions of interest to 
employes, shall be referred to this Committee, and it shall be the 
duty of this Committee to investigate, discuss, and make recommend¬ 
ations on such matters as involve policies or plans affecting future 
working arrangements; but the Committee shall in no case pass 
upon individual cases or make binding decisions. 

2. The Committee shall submit all of its recommendations and 
reports on its investigations to the Assembly for further discussion 
and for its approval or rejection, and it may have the subject re¬ 
committed to it at the discretion of the Assembly. 


760 THE WORKER IN MODERN ECONOMIC SOCIETY 

ARTICLE XI 

PROCEDURE FOR FIRST NOMINATIONS AND FIRST ELECTIONS 

1. In order to provide for first elections of Representatives the 
President of the Company shall appoint three Representatives of the 
Management, and the Plant Superintendent shall appoint three 
Representatives of the Employes to serve on a temporary Joint 
Committee for the above purpose. This Committee shall exercise 
all the powers and perform all the duties of the Standing Committee 
on Procedure and Elections until that Committee is appointed at 
the first meeting of the Assembly. 

ARTICLES xn AND XIII 

INDEPENDENCE OF ACTION AND NO DISCRIMINATION 

Neither the Company nor the Employes shall discriminate 
against any Representative on account of any position taken while 
discharging his duties as such Representative. No favor or prejudice 
may be shown either by the employes towards any employe in the 
matter of voting or in any other matter by reason of the employe’s 
race, religious creed, political belief, membership or non-membership 
in any labor union or other organization. 

ARTICLES XIV AND XV 

1. When any matter is under consideration by a Plant Assembly 
or by Plant Assemblies which jointly concerns a number of the plants 
of the Company, the President may, at his discretion, call to Chicago 
or such other center as is deemed best, at the expense of the Company, 
two Employes’ Representatives selected by their side of the Assembly 
and two Management Representatives similarly selected, from the 
Assembly of each Plant involved, and these shall constitute a tempo¬ 
rary General Assembly for consideration of the matter or matters 
and arrival at a decision in Joint Conference. 

2. The Chairman of a General Assembly shall be the President 
of the Company or an officer of the Company designated by him. 
The General Assembly shall develop its own Rules and Procedure, 
and it shall have all the privileges of a Plant Assembly in calling for 
information and evidence and in making investigations. 

9. SHOP COMMITTEES: SUBSTITUTE FOR, OR 
SUPPLEMENT TO, TRADE UNIONS P 1 

Many who are ignorant of the continental experience with shop 
committees are acquainted with the Whitley Councils of England, 
and believe the American shop-committee system to be similar. 

1 By Paul H. Douglas, Journal of Political Economy, XXIX (1921), 89-107. 


ASSOCIATION AND JOINT REPRESENTATION 


761 


The two plans differ however in the following basic respects: (1) 
The American shop-committee system is confined to individual 
plants, or at most to the plants of one employer, whereas the Whitley 
system provides for district and national councils for each industry, 
and indeed in practice has placed greater emphasis upon them than 
upon the formation of local works councils. (2) Whereas the over¬ 
whelming majority of American shop committees are not in any way 
affiliated or connected with the trades-unions as such; in England 
the trades-unions are recognized as the spokesmen of labor and select 
their representatives to meet the representatives of the employers. 
Stated more simply the shop-committee system in America has grown 
up outside the unions, while the Whitley system is based upon them. 

There can be but little doubt that the recent enthusiasm for shop 
committees on the part of the employers has been due to their belief 
that there was a ready substitute for the unions. They were thus 
enabled to admit the principle of collective bargaining, which was 
becoming accepted by the public as equitable and necessary, and yet 
avoid the necessity of dealing with the unions. This attitude was 
clearly manifested in the President’s First Industrial Conference of 
1919 when the representatives of the employers insisted that the unit 
of collective bargaining should be the shop stating that “ the establish¬ 
ment rather than the industry as a whole or any branch of it should, 
as far as practicable, be considered as the unit of production and 
mutual interest on the part of employer and employee.” In the 
Canadian Industrial Conference the employers took a similar attitude 
and argued that they “should not be required to negotiate except 
directly, with their own employees.” 

It is most significant and indeed practically conclusive that 
the vast majority of shop committees are in plants that have been 
operating on the non-union shop basis. 

There are many grave defects in most of the existing plans 
which while not proving that a system purged of these faults would 
be undesirable, do indicate that the workmen will not accept them in 
their present form at least. Among these defects are: (1) In many 
cases the employees control or influence the election of committeemen. 

(2) The function of many committees is limited to non-vital matters. 

(3) The control in the committees’ decisions is frequently held by 
the employers. (4) In many cases the decision of the joint committee 
is not final but must be approved by the management before taking 
effect. (5) The qualifications for voting and holding office are such 
as to debar a large number of employees. (6) Shop committeemen 


762 THE WORKER IN MODERN ECONOMIC SOCIETY 


are frequently prevented from pleading the case of the workmen 
strongly because of their fear of being discharged or discriminated 
against. 

Careful analysis of the situation will show that even a model 
shop committee is inherently not as effective a bargaining agency 
as the unions and hence from the standpoint of the workmen cannot 
be an adequate substitute. 

1. Since it is limited to one shop or to the employees of one 
concern, it does not protect the “fair” employer from the “nibbling 
of competition” and the underbidding of the meanest man. It is 
thus likely to drag the conditions of labor down to the level of the 
conditions granted by the meanest man. 

2. Since under the shop-committee system employers treat only 
with their own men, the workmen are deprived of expert outside 
advice in putting their case and conducting their negotiations. The 
modern wage contract needs a great deal of skill in negotiating. 
The owners of a concern hire skilled experts to represent them. The 
general manager, the personnel expert, the industrial engineers, and 
the lawyer are all the hired outside representatives of the shareholders. 
It is only fair therefore that the workers should be allowed outside 
representatives as well. Men who work with their hands all day are 
seldom capable of driving as good a bargain as a skilled and shrewd 
negotiator. The union business agent or “walking delegate” is this 
expert negotiator for the workmen and, despite his many faults, 
performs on the whole exceedingly valuable functions for those whom 
he represents. Indeed it might be said that the union is in part a 
device whereby individual workmen are able to pool small amounts 
and hire a professional expert to represent them. This opportunity 
the shop committee virtually denies them. 

3. It does not furnish the instrumentality which the unions do 
provide for the enactment of labor laws to better the conditions of 
labor. The labor question cannot be settled on the economic field 
alone. Protective legislation has been found necessary to protect 
men as well as women from the effects of unrestricted competition. 
Such legislation is generally opposed by the organized employers and 
its passage and subsequent enforcement depends largely upon the 
efforts of labor itself, together with that of the independent human¬ 
itarian groups. The unions, representing as they do a wide constitu¬ 
ency, are enabled to apply considerable measure of pressure for these 
purposes which unconnected shop committees would be totally 
unable to muster. 


ASSOCIATION AND JOINT REPRESENTATION 


763 


4. Save in a very large plant, the shop-committee system cannot 
afford the protection against sickness and unemployment that the 
union with its insurance funds, drawn from a wide area, can offer. 

5. In the event that it became necessary for the workmen of a 
given plant or company operating under the shop-committee system 
to put pressure upon the employer to compel the acceptance of a 
demand, they would be in a very weak position to enforce their claim. 
Should they collectively leave work, they would not have the moral 
or financial backing of their fellow-workers in other plants. They 
could not secure strike benefits to assist them, nor would other workers 
aid them by putting pressure upon the employer to accede to their 
requests. 

It may well be asked whether a federation of shop committees 
and the creation of a council for the industry as a whole, outside the 
existing unions, is not an adequate substitute for the unions. Such 
is the plan of organization of the Loyal Legion of Loggers and Lumber¬ 
men, which has been functioning in the lumber industry of the Pacific 
Northwest for the last three years, and it is evidently some such plan 
that Mr. W. L. Mackenzie-King regards as a possible solution. 
This method would enable a minimum scale of wages and working 
conditions to be set for the industry as a whole, and would consequently 
protect individual employers against the competition of their fellows. 
It would therefore be a vast improvement upon the unco-ordinated 
shop-committee system. Is it then a substitute for the unions ? 

In the first place, it may be remarked that such a plan of organi¬ 
zation would be a union of a sort. It is not necessary for an organi¬ 
zation to have the cachet of the American Federation of Labor to be a 
union. Secondly, the question whether it would be preferable to 
the existing type of union would depend upon the opportunities 
granted the workmen under it. If both the rank and file of the workers 
and their representatives on the shop committees and on the industrial 
council were allowed to meet separately from the employers; if the 
organizations of the various industries were allowed to federate; if 
each body were allowed to accumulate funds for insurance and 
unemployment and to assist the workers in other shops or. industries 
if they believed them to be in the right; if the workers through their 
organizations were permitted to present their program of legislation 
to legislative bodies; if they were allowed to hire experts from without 
a plant or industry who would not be dependent upon the employers 
for their jobs; if all these conditions existed, then such a system 
would be a sufficient protection to the workman. It is extremely 


I 


764 THE WORKER IN MODERN ECONOMIC SOCIETY 

doubtful, however, whether the great mass of employers, in their 
present frame of mind, would allow such freedom to the workers. 

If the valuable possibilities of the shop committee are to be 
preserved, it must be clearly envisaged that it is to be as a supplement 
to the unions and not as a substitute for them. 

What then are the functions which the shop committee can per¬ 
form, once the union has been recognized as the body with which 
the collective bargain is to be made ? 

1. It would furnish an excellent instrumentality for applying and 
interpreting the terms of the labor agreement made with the unions 
and would enable grievances to be settled with a minimum of friction. 
Any labor agreement necessarily creates vexatious problems of admin¬ 
istration, such as the correct classification of workmen into trades, 
the interpretation of overtime, the determination as to whether 
discharges are made for cause or for union membership or activity, 
the enforcement of rules as to piece-rates, hourly wages, etc. Ordi¬ 
narily these adjustments are made in behalf of the men by the business 
agent who is generally ignorant of the details of plant administration 
and, however excellent as a combative negotiator of the original 
contract, is seldom tactful in bringing grievances to the attention of 
the management. In a large percentage of the cases he interferes 
with and impedes production unnecessarily in his attempt to settle 
grievances. Indeed, much of the opposition to unions on the part 
of the employers is due not so much to fundamental opposition to the 
principle of collective bargaining, as to their fear of a “ walking dele¬ 
gate” interfering unnecessarily with the operation of their plants. 

2. It would permit workers and employers to meet on a common 
ground and understand each other. The representatives of both 
groups can meet face to face in discussion over common problems. 
From this meeting a better mutual attitude is almost invariably 
created than would be secured by dealing only through intermediaries. 

3. It would enlist the workers’ interest in production to a much 
greater extent than at present and would make the plant more efficient. 
Once protected by the collective bargain, workmen can be brought 
to realize that the greater the production the higher will be their 
real wages. 

4. It would train the worker in the real problems of industry and 
would acquaint him with the actual conditions of affairs. Just as 
the ballot leads citizens to become more interested in political matters, 


ASSOCIATION AND JOINT REPRESENTATION 


765 


so would the very act of industrial suffrage cause the workers to take 
a more intelligent interest in the affairs of the workshop. Industry 
would thus become educative in a real sense, turning out better men 
as well as more goods. With the increased knowledge of actual 
conditions, impossible demands upon the part of the workmen would 
become less frequent. 

5. It would lay the basis for a more effective organization of the 
workers, with the plant as the unit of organization rather than the 
present heterogeneous local. If the workshop is used as the basic 
local, there will be a better attendance at meetings and more interest 
in union affairs. 

PROBLEMS 

1. Why has so little been written in the past about employers’ associations 
in comparison with the great volume of material about labor unions ? 

2. What classes compose the various chambers of commerce? To what 
extent are these common interests joining them together ? Are such 
organizations adapted for negotiating with the unions; for combating 
them ? Why ? For what purposes are the state and national manu¬ 
facturers’ associations organized? the local “associated industries”? 
Compare their functions with those employers’ associations which are 
organized on trade or industrial lines. 

3. Did employers’ associations precede organization of unions or follow 
the latter as a defensive measure (consult Bonnett, Employer's Associa¬ 
tions in the United States). 

4. Is the individual employer so helpless before a federated union as Pro¬ 
fessor Bonnett seems to believe and why ? 

5. To what extent does the attempt by labor to negotiate city-wide, 
section-wide, and in some cases nation-wide standard agreements 
necessarily bring about the organization of employers’ associations and 
why? If you were a labor unionist, would you welcome or regret 
the creation of such associations and why? If you were a labor 
official ? 

6. Are the agreements of an employers’ association with unions binding 
upon its members? Why or why not? The closed-shop division of 
the United Typothetae (employing printers) agreed in 1919 that the 
forty-four-hour week should be introduced in 1921. As that time 
approached, large numbers of printing firms resigned from the closed- 
shops division and organized to oppose the forty-four-hour week. 
Were they legally justified? Were they morally justified? Were 
such actions common, could the unions continue to deal with the 
employers’ associations ? 


766 THE WORKER IN MODERN ECONOMIC SOCIETY 

7. Enumerate some of the methods used by belligerent employers’ associa¬ 
tions ? To what extent do they parallel methods used by the unions 
and to what extent are they singular to the employers? Describe 
resemblances between the organization of both sides and the preparation 
of nations for war ? 

8. If a trade is tied up by a strike, to what extent will employers (a) in the 
same city, ( b ) in other cities, be likely to sign contracts with the union 
in order to receive the business formerly possessed by those employers 
whose men are still out ? Would the employers be more likely to do 
this than the union members to go to work in “scab” shops? Give 
your answer after consideration for the following industries: (a) men’s 
clothing, ( b ) iron and steel, (c) railroads, ( d ) printing. 

9. What is the difference between a shop committee and a union ? 

10. Why have employers taken the initiative in introducing shop committees 
in this country ? 

11. “The establishment, rather than the industry as a whole or any branch 
of it, should be considered as the unit of production and mutual interest on 
the part of employer and employee.” Do you agree or disagree and 
why ? 

12. Analyze the shop committee plan of Swift and Company as regards 
(a) composition, ( b ) functions, (c) method of decision, and evaluate 
each. To what extent do you think the workmen are protected by the 
plan and how ? 

13. “Ultimate settlement of matters failing of adjustments by the works 
council is provided for by compulsory arbitration in only a small minority 
of establishments. Ultimate power of settlement rests with officials 
or the board of directors of the company in only a minority of estab¬ 
lishments.” Just what is the significance of this? 

14. Under the shop committee system the workmen strike only in the rarest 
cases. What does this prove? 

15. “Employers who are almost universally organized into various forms 
of employers’ associations which link up the various concerns within 
industries and between industries cannot consistently demand that the 
workmen should not be organized in a unit larger than the shop or 
concern.” Do you agree or disagree and why? 

16. “It is impossible to prevent overt or tacit pressure upon the workmen 
by the management to elect only conservative men to the committee.” 
Do you agree ? Why ? 

17. “Under the shop committee system the representatives of the workmen 
do not dare to plead the cause of the men as they would if they had the 
consciousness of an outside organization supporting them.” How can 
this be so ? Cannot a sincere employee prevent this ? 

18. “If a firm is a ‘good’ employer both workmen and management will 
profit more by a shop committee than by a union.” Why or why not ? 


ASSOCIATION AND JOINT REPRESENTATION 


767 


19. “With our ever-widening market, the unit of labor organization must 
expand equally in order to maintain basic standards everywhere and to 
protect those already in its folds. To propose a return to the shop as 
the final unit of labor organization is, therefore, as much of an anachron¬ 
ism as to propose that our industrial system should return to the pel iod 
of land self-sufficiency.” Explain. 

20. In what ways can the shop committee system be used as an agency to 
increase production ? Be specific. 

21. In what ways could the shop-committee system be used to supplement 
trade unionism ? What transformation in trade union structure would 
this require and what changes in policy would it likely cause ? Is it 
likely to occur ? Why or why not ? 




CHAPTER XXV 


METHODS OF WAGE PAYMENT AND 
PROFIT-SHARING 

A. Methods of Wage Payment and Scientific Management 

i. THE DIFFERENT VARIETIES OF WAGE 

PAYMENT 1 

The two leading forms of Industrial Remuneration under the 
wage-system are time-wages and piece-wages. 

Intermediate between these principal forms stands that known as 
task-wage; while supplemental to these two main methods we find 
those various systems which will here be designated by the name of 
progressive wages. 

The employee engaged on time-wage sells to his employer the 
labour which he shall perform within a given period, irrespective of 
the amount of labour performed within that period. 

The employee engaged on piece-wage sells to his employer a 
specified amount of labour, irrespective of the time occupied by the 
performance of that labour. 

The employee engaged on task-wage sells to his employer the 
labour which he shall perform within a given period, with an express 
agreement on the part of the workman to perform within that period 
not less than a specified minimum amount of labour. 

Under the method of progressive wages the employee receives a 
promise that, if his labour shall exhibit a specified degree of efficiency, 
he shall obtain, in addition to his fixed time-wage or piece-wage, a 
further remuneration, here called a premium. 

One matter of importance in relation to wages is the distinction 
between wages paid to a single worker, in respect of his individual 
labour alone, and wages paid as the collective remuneration of the 
combined labour of a group of workmen. 

The lump sum paid in respect of the group may be apportioned 
among its members by their employer by allotting to each a specified 

1 Adapted with permission from David F. Schloss, Methods of Industrial 
Remuneration , pp. n, 12, second edition. (Williams and Norgate, 14 Henrietta 
Street, Covent Garden, London, 1894.) 


768 


WAGE PAYMENT AND PROFIT-SHARING 


769 


share in this aggregate amount: I call this “collective task-wage,” 
or “collective piece-wage,” or “collective progressive wages,” as 
the case may be. 

Or this lump sum may be apportioned by the employer between 
the group by, first, deducting the time-wages of the subordinate 
members, and then paying to the principal member or members, 
out of the balance thus left, a piece-work remuneration, the amount 
of which varies directly with the rate of speed in working maintained 
by the group. Work done under this method will here be spoken of 
as “contract work.” 

Or this lump sum may be apportioned amongst the members of 
the group in such proportions as they, at their own discretion, shall 
determine. Work performed under this method I call “co-operative 
work.” 

2. THE COMMON BASIS OF TIME AND 

PIECE WAGE 1 

Time-wage very often has a recognised piece-basis, the remuner¬ 
ation received by the operative being fixed with a distinct relation, 
tacit or expressed, to the amount of the labour, which he performs 
within the period in respect of which that remuneration is received. 
On the one hand, the employer nearly always discharges all operatives 
who do not work at a certain minimum rate of speed; on the other, 
the operatives always object to working at a rate of speed incompatible 
with their reasonable well-being, and, in many trades, fix a certain 
maximum speed, which they, upon one ground or another, decline to 

exceed.In the same manner all forms of piece-wage virtually 

rest upon a time-basis. In short, a rate of wages, whether piece- 
wages, or time-wages, will on analysis be found to be fixed with 
reference to what is here called the standard of remuneration; that 
is to say, with reference to the amount of money which employer 
and employee alike expect an operative working at a certain rate of 
speed to be able to earn within a given period. 

Two points must never be lost sight of: one is the amount of work 
which an operative of average capacity, working with such degree 
of exertion as the average workman is willing to exercise, is able to 
produce within a given period; the other is the amount of money or 
money’s worth which the average operative requires in order to provide 
himself and his family with the average amount of commodities and 

1 Adapted with permission from David F. Schloss, Methods of Industrial 
Remuneration , pp. 13, 21, 23, second edition. (Williams and Norgate, 14 Henrietta 
Street, Covent Garden, London, 1894.) 



770 


THE WORKER IN MODERN ECONOMIC SOCIETY 


comforts (including the comfort of saving for a rainy day) accepted 
by the men of his class as their “standard of comfort.” Speaking 
with approximate accuracy—accuracy sufficient for our present 
object—we may say, that, if the men in any trade are willing to 
labour for x hours in a week and to produce work to the amount of 
y per hour, and if the amount of money required to obtain the annual 
accepted quantum of commodities and comforts be z, then, if we 
suppose that the men in this trade can reckon upon being employed 
continuously throughout the year, the amount of work which can be 
bought for z, whether from an operative employed on time-wage or 
from an operative employed on piece-wage, will be 52 xy. 

Such being the general nature of the considerations, which deter¬ 
mine the standard of remuneration in each case, the point now occupy¬ 
ing our attention—the time-basis of piece-wage—may be illustrated 
by a concrete example taken from a trade in which work of an identical 
nature is done in some instances on time-wage, in others on piece- 
wage—the printing trade. Under the scale of wages agreed upon 
between the employers and the Trade Union in London, the remuner¬ 
ation of compositors employed on time-wage is fixed at 385. per 
week of fifty-four hours, say, 8§d. per hour. Now, the quantity of 
type of the description known as “nonpareil,” which a compositor 
is able, and is expected, to set up in one hour, is one “thousand.” 
Accordingly, when we turn to the piece-wage prices, we find that an 
exact relation exists between these prices and the standard time-wage, 
for the remuneration'specified by the scale for setting up nonpareil 
type is 8|d. per thousand. Here it is clear that, whether the work 
is done on time-wage or on piece-wage, “sixpenny-worth of work” 
is in either case the setting up of twelve-seventeenths of one thousand 
nonpareil; in other words, the rates of time-wage in this trade are seen 
to be both fixed with reference to the same standard of remuneration. 

3. THE FACTORS OPERATING FOR AND AGAINST 

PIECE RATES 1 

The causes leading to the adoption of payment by results are 
various. We hear most nowadays in this connection of the need for 
increasing output and making the most of our industrial plant; and, 
from the manufacturer’s point of view, this need becomes increasingly 
urgent as the machinery used becomes more complicated and more 

1 Adapted with permission from G. D. H. Cole, The Payment of Wages , “Trade 
Union Series No. 5,” pp. 15, 16, 17, 18. (Fabian Research Department, 25 Tothill 
Street, Westminster.) 


WAGE PAYMENT AND PROFIT-SHARING 


771 


expensive. This, however, has not been in the past by any means 
the only cause. The Trade Union standard rate is continually 
attacked by employers and economists on the ground that it tends to 
ensure the same remuneration to the less capable and to the “slacker” 
as to the more capable or more energetic workers. 

On the other hand, in some cases payment by results is opposed 
by employers and workers on other grounds. The employer may 
hold that he can get better results out of his workers by paying 
more for supervision and driving them hard than by increasing his 
direct wages bill. In short, he may hope to get, and in some cases 
may actually get, piece-work intensity for time wages. Secondly, 
the employer may have a better motive. Quality may count for much 
in his work, and he may hold that the adoption of payment by results 
will lead to a deterioration in the quality of the product. 

To these human considerations many others must be added. 
One of the main determining factors under any system of payment 
by results is the degree in which a given amount of effort or skill 
can be relied upon to produce a given result. This is naturally the 
case roughly in proportion as the products, the processes, and the 
machinery used are standardised. A worker producing a standard 
product by a standard process on a standard machine will differ in 
productivity from another worker on the same job according to the 
effort used, and the skill or dexterity with which that effort is applied. 
Payment according to production, therefore, will in such a case mean 
payment according to the productive value of the worker, and will 
therefore so far conform to the individualist standard of justice. 

Even where the material factors are less uniform, but the product 
is absolutely a standard product, readily measurable in quantitative 
terms, there will be a strong tendency to adopt payment by results; 
for here, too, favouritism or ill-luck, apart from good and bad condi¬ 
tions, will be likely to “average out,” fairly over a period of time. 

Thirdly, where there is not even this rough accuracy, and where 
the product is not so readily measurable in purely quantitative terms, 
the conditions may be such as to encourage the adoption of payment 
by results. If the overhead charges or “oncost” of an industrial 
process are very high, and a considerable saving can be effected by 
getting a bigger production from the machine, it may pay the employer 
to offer what seem to be generous terms in order to secure greater 
production. 

Fourthly, even where none of the above conditions is present in 
a high degree, the continuance of a system of payment by results 


772 


THE WORKER IN MODERN ECONOMIC SOCIETY 


may be made easy by the existence of a well-organized system of 
collective bargaining about piece-work prices or basis-time allowance, 
under which the difficulties and abnormalities arising under the system 
are constantly corrected and adjusted by organised effort on both sides. 

It is clear that, even in industries in which some of the above 
conditions exist, the workmen’s objection to piece-work is upheld 
largely by the absence of any satisfactory method of safeguarding 
piece-work prices. An unregulated system of payment by results, 
under which the employer or his foremen fix and readjust prices for 
successive jobs at their own sweet will, is certainly the worst possible 
system of payment for all except the few most rapid and dexterous 
workers. Employers would probably have encountered far less 
resistance to their efforts to establish payments by results had they 
not so often attempted to introduce it in this form, and thus to use 
it as a method of defeating collective bargaining. 

4. THE HALSEY PREMIUM PLAN 1 

Halsey’s constructive plan is a scheme by which he proposes to 
so alter the piece-work system that it will never be necessary under 
any circumstances to cut the rates. His method consists in first 
determining the time which the men have been taking to do their 
work, and then announcing that if they will finish it more quickly, 


TABLE XCIII 
The Premium Plan 


Output 
(io-hour day) 

(Pieces) 

Time Saved 
(Hours) 

Pr^rr,;,,™ Day Total 

Premium Rate Earnings 

Labor Cost 
per Piece 

IO. 

O 

$0.00 +$3.00 = $3.00 

•30 

15. 

5 

0.50 + 3 -oo = 3 - 5 ° 

•233 

20. 

10 

1 .00 +3.00= 4.00 

. 20 

25 . 

15 

1.50 + 3-oo = 4.50 

. l8 

30 . 

20 

2.00 +3.00= 5.00 

. 167 


they will be given, in addition to their old day rate, a new premium 
rate of so much an hour for the time saved. This premium rate is 
always less than the day rate. The premium rate is usually about 
one-third of the day rate; and this fact makes the premium system 
different from straight piece-work. In the following tables, the day 
rate is fixed at 30c. and the premium rate at 10c. Note that the 

1 Adapted with permission from Horace Bookwalter Drury, Scientific Manage¬ 
ment, pp. 43-51. (“Columbia University Studies,” Vol. LXV, 1915. Longmans, 
Green & Co., Agents.) 
















WAGE PAYMENT AND PROFIT-SHARING 


7 73 


rate of increase in total earnings is low as compared with the rate of 
increase in output. 

5. A SCIENTIFIC MANAGEMENT WAGE PLAN: THE 
TAYLOR DIFFERENTIAL PIECE RATE 1 

The means which the writer has found to be the most effective 
in obtaining the maximum output is the differential piece-rate system. 
This consists briefly in paying a higher price per piece if the work 
is done in the shortest possible time and without imperfections than 
is paid if the work takes a longer time or is imperfectly done. To 
illustrate: suppose 20 units to be the largest amount of work of a 
certain kind that can be done in a day. Under the differential piece 
rate system, if he finishes this number he receives 15 cents a piece, 
making his pay for the day $3.00. If, however, he turns out only 19 
pieces he would get only 12 cents per piece, making his pay for the 
day $2.28. 

The first case in which a differential rate was applied during the 
year 1884 furnishes a good illustration of what can be accomplished 
by it. A standard steel forging, many thousands of which are used 
each year, had for several years been turned at the rate of from four 
to five per day under the ordinary system of piece work, 50 cents 
per piece being the price paid for the work. After analyzing the job, 
and determining the shortest time required to do each of the ele¬ 
mentary operations of which it was composed, and then summing 
up the total, the writer became convinced that it was possible to 
turn out ten pieces a day. 

In place of the 50 cent rate that they had been paid before, the 
men were given 35 cents per piece when they turned them at the speed 
of 10 per day; and when they produced less than ten they received 
only 25 cents per piece. 

It took considerable trouble to induce the men to turn at this 
high speed, since they did not at first fully appreciate that it was the 
intention of the firm to allow them to earn permanently at the rate of 
$3.50 per day. But from the day they first turned ten pieces to the 
present time, a period of more then ten years, the men who understood 
their work have scarcely failed a single day to turn at this rate. 
Throughout that time until the beginning of the recent fall in the scale 
of wages throughout the country, the rate was not cut. 

The following table will show the economy of paying high wages 
under the differential rate in doing the foregoing job: 

Adapted from F. W. Taylor, A Piece Rate System, pp. 112-13; 122-24. 
(Studies American Economic Association, Vol. I, 1896.) 


774 


THE WORKER IN MODERN ECONOMIC SOCIETY 


COST OF PRODUCTION PER LATHE PER DAY 

ORDINARY SYSTEM OF PIECE WORK DIFFERENTIAL RATE SYSTEM 


Man’s wages. 

.. .. $2.50 

Man’s wages. 

•. $ 3-50 

Machine cost. 

. 3-37 

Machine cost. 

••• 3-37 

Total cost per day. 

. $ 5-87 

Total cost per day.... 

, .. $6.87 

5 pieces produced: 


10 pieces produced: 


Cost per piece. 

. $1.17 

Cost per piece. 

, . . $0.69 


6. THE GANTT SYSTEM OF TASK WORK 

WITH BONUS 1 

Not being ready to introduce the differential piece rate system, 
which was regarded as the ideal one for obtaining a maximum output, 
I felt that we should not wait for perfection, but should offer the 
workmen additional pay in some manner that would not interfere 
with the ultimate adoption of the differential piece-rate system. 
Accordingly, I suggested that we pay a bonus of 50 cents to each work¬ 
man who did in any day all the work called for on his instruction card. 
This was adopted at once; the superintendent of the machine shop 
suggested that we should also pay the gang boss a bonus each day for 
each of his men that earned his bonus. This was also approved, and 
both plans were ordered to be put into execution as promptly as 
possible. 

The plan as started at Bethlehem of paying a fixed bonus for 
performing the task had one element of weakness, namely, that after 
the men had earned their bonus there was no further incentive to 
them. It was some time before I devised a satisfactory method for 
adding such an incentive, which was finally accomplished by paying 
the workman for the time allowed plus a percentage of that time. 

For instance, if the time allowed for a task is three hours, the 
workman who performs it in three hours or less is given four hours’ 
pay. He thus has an incentive to do as much work as possible. 
If the workman fails to perform the task within the time limit he gets 
his day rate. The time allowed plus the bonus is the equivalent of 
a piece-rate; hence we have piece-work for the skilled and day work 
for the unskilled. 

One other feature of this work at Bethlehem had a most important 
effect on the result—namely, that in addition to the bonus paid the 
foreman for each man under him who made bonus, a further bonus 

1 Adapted with permission from H. L. Gantt, Work, Wages, and Profits, pp. 107, 
114-15, second edition, revised and enlarged. (Engineering Magazine Co., 1919.) 












WAGE PAYMENT AND PROFIT-SHARING 


775 


was paid if all made bonus. For instance, a foreman having ten men 
under him would get ten cents each, or 90 cents total, if nine of his 
men made bonus; but 15 cents each, or $1.50 total, if all ten made 
bonus. The additional 60 cents for bringing the inferior workmen 
up to the standard made him devote his energies to those men who 
most needed them. 

This is the first recorded attempt to make it to the financial 
interest of the foreman to teach the individual worker, and the 
importance of it cannot be over-estimated, for it changes the foreman 
from a driver of his men to their friend and helper. 

7. THE EMERSON EFFICIENCY WAGE 1 

The aim of the Emerson Bonus System is to make an easy and 
gradual transition from day rate to efficiency reward. 

In this system the man is guaranteed his day rate and is paid a 
bonus for efficiency, but the bonus instead of starting when the 
standard, or 100 per cent efficiency, is attained, starts at 66.6 per cent 
efficiency, thereby rewarding the effort to attain the standard as well 
as paying a high bonus for high efficiency. From 66.6 per cent to 
100 per cent efficiency he receives his hourly rate for the time worked 
and an increasing bonus. For efficiencies above 100 per cent he 
receives his hourly rate for the time worked and a bonus consisting 
of two parts—first, the full hourly rate for all the time saved, and 
second, 20 per cent of the wages for the time worked. 

An employer can well afford to pay a large bonus; he can well 
give the total wages saved as bonus and derive his own benefit from 
the increased output of the plant and the greatly reduced overhead. 
It is for this reason that for efficiencies above 100 per cent the worker 
is given as a bonus his hourly rate for all the time he saves in addition 
to 20 per cent on the wages for the time he works. 

At 66.7 per cent efficiency the worker will receive: 


His day rate for 6 hours worked. $1.20 

(Which is at the rate of $0.20 per hour.) 

At 100 per cent efficiency he will receive: 

His day rate for 4 hours worked. $0.80 

20 per cent bonus on 4 hours worked_ 0.16 

Total. $0.96 

(Which is at the rate of $0.24 per hour.) 


1 Adapted with permission from A Comparative Study of Wage and Bonus. 
Systems , pp. 21-23, 25-28. (Emerson Co., 30 Church Street, New York City 
Copyright, 1912.) 






776 


THE WORKER IN MODERN ECONOMIC SOCIETY 


At 200 per cent efficiency he will receive: 

His day rate for 2 hours worked. $0.40 

His day rate for 2 hours saved. 0.40 

20 per cent bonus on 2 hours worked_ 0.08 

Total. $0.88 


(Which is at the rate of $0.44 per hour.) 

The payment of bonus for individual jobs leads, however, to 
various difficulties. What is wanted is a man who averages well, 
not one of spurts and jumps. By the use of averages a time longer 
than one and a half of standard, that is, less than 66.7 per cent effi¬ 
ciency, is penalized; under the individual job system it is not. 

It is also much easier to calculate efficiencies and rewards for all 
the operations for a period than for each one separately, and clerical 
expense and effort should be avoided as much as possible. 

Finally, a much better conception of a man’s ability is obtained 
from a record of weekly or monthly averages than from a list of several 
hundred individual job efficiency records fluctuating from 30 to 100 
per cent. 

Bonus on wage rate enables the man who is keenly alert or the 
one who is specially adapted to his work to bring his pay considerably 
above standard wages. A man who belongs in the 120 per cent 
class may thus earn regularly 40 per cent higher pay and without 
any more effort (perhaps not as much) than the 60 per cent worker. 






WAGE PAYMENT AND PROFIT-SHARING 


777 


8. A COMPARISON OF BONUS PLANS OF WAGE PAYMENT 1 


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1 Taken with permission from a table prepared by M. W. Gassmore for the 
Committee on Labor Relations of Seattle Chamber of Commerce and Commercial 
Club. Seattle, October 15, 1920. 









































































TABLE XCI V—Continued 


778 


THE WORKER IN MODERN ECONOMIC SOCIETY 


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780 THE WORKER IN MODERN ECONOMIC SOCIETY 

9. THE MAIN FEATURES OF SCIENTIFIC 
MANAGEMENT 1 

Perhaps the main feature of scientific management, so far as it 
affects the worker, is the setting of a standard task or the amount 
that a worker should accomplish at a given variety of work in a specified 
length of time. This is generally accomplished by analyzing a job 
as a whole into its chief elementary movements and then after timing 
the length of time which it takes to perform these movements, com¬ 
bining them after an allowance for fatigue into a standard time for 
the entire job. The question as to whose movements should be 
times, whether those of the fastest, the fairly quick, or the average 
workman, is a matter which in practice depends largely upon the 
state of the labor market and the relative strength and awareness of 
management and workmen. Allied with this question is that of 
which times should be combined, again the issue being as to whether 
the best times or more nearly average times of the various types of 
workmen shall be used. 

Once the standard is set, invariably at a higher point than that 
which previously obtained, the worker is offered monetary inducements 
to attain or exceed it. Herein lies the significance of the Taylor, 
Gantt, and Emerson wage systems which we have discussed. The 
worker furthermore is assisted in attaining this standard, whether 
by means of instructions which enable him to eliminate wasteful 
motions, by surrounding him with better tools and equipment, by 
furnishing him with expert assistance, or by a general improvement 
of managerial efficiency enabling him more easily to reach his goal. 
Some of the more important features of improving the methods of 
work are: (1) The standardization of tools and equipment. This has 
led to a thorough study of matters such as the most effective types 
of belting and of the correct method of cutting metals. (2) The 
routing and scheduling of the work so that production may move 
smoothly with no gluts and stoppages. (3) Instruction cards whereby 
the worker is told how to do his particular job. This seems to be 
particularly applicable to metal manufacturing establishments. (4) 
Motion study in the elimination of wasteful and unnecessary move¬ 
ments and in some cases the provision of the proper amount of rest 
periods. (5) Improved methods of selecting workmen whether 
by interview, physical examination, trade or psychological tests. 


1 Prepared. 


WAGE PAYMENT AND PROFIT-SHARING 781 

(6) Methods of stores control enabling the workmen to receive both 
material and tools precisely when he wants them. 

The fundamental change from the standpoint of organization 
has been what Justice Brandeis calls the separation of planning from 
performing. The correct methods of work are developed by a separate 
planning department and the workmen are given instructions as to 
how to carry out their jobs. This most significant development is 
generally accompanied by another, namely, the subdivision of these 
planning tasks among different members of the executive force. Mr. 
Taylor went so far as to create eight functional foremen who would 
direct and supervise the workmen on some specific field. Four of 
them were in the shop proper, namely: (1) the gang boss who super¬ 
vised the work until it was set up on the machine; (2) the speed 
boss who took charge of the work until the operation was finished; 
(3) the inspector for quality; (4) the repair boss who made all neces¬ 
sary repairs to the machines. The other forces were in the planning 
room consisting of (5) the routing clerk; (6) the instruction card 
clerk; (7) the time and cost clerk; and (8) the shop disciplinarian—the 
latter being expected to superintend the records of the men and the 
general relations of the management to them, thus being an interest¬ 
ing forerunner of the modern personnel manager. 

Such minute functionalization has rarely been completely carried 
out in practice, but with the enlargement of the sphere of manage¬ 
ment’s activities has necessarily come the creation of specialized in¬ 
dividuals or departments to carry out specific lines of work. 

It is significant that wherever genuine scientific management has 
been introduced it has resulted in a vastly increased output, com¬ 
monly double or treble that of before. 

10. WHY LARGE GROUPS OF LABORERS OBJECT 
TO SCIENTIFIC MANAGEMENT 1 

Scientific management, say the union representatives, is a device 
employed for the purpose of increasing production and profits which 
concerns itself almost wholly with the problem of production, dis¬ 
regarding in general the vital problem of distribution. As such it is 
a reversion to industrial autocracy which forces the workers to depend 
upon the employers’ conception of fairness and limits the democratic 
safeguards of the workers. It is unscientific and unfair in the setting 

1 Adapted with permission from R. F. Hoxie, “Why Organized Labor 
Opposes Scientific Management,” Quarterly Journal of Economics , XXXI, 62-85. 


782 


THE WORKER IN MODERN ECONOMIC SOCIETY 


of the task and in fixing wage rates; in spirit and essence it is a 
cunningly devised speeding-up and sweating system, it intensifies 
the modern tendency toward specialization of the work and the task; 
it condemns the worker to a monotonous routine and tends to deprive 
him of thorough initiative and joy in his work. 

Yet the statement of these objections does not furnish any very 
real or significant answer to the question why organized labor opposes 
scientific management. It gives answers in terms of belief only. 
It gives no clue to the causes of this belief. 

The experience of the workers has been that the old-line employer 
has been constantly endeavoring to speed them up and overwork 
them by the creation of “swifts” and “full-hours,” through the intro¬ 
duction of “company men,” by threatening and coercing individuals 
whose resisting power was weak or whose circumstances were pre¬ 
carious and by offering secret premiums or bonuses. When through 
these methods some man or groups of men has been induced to speed 
up, their accomplishment has been taken as the standard for all 
to attain. Thus in the case of day work, the accomplishment of the 
strongest and swiftest was the goal set up for all, if wages were not 
to be lowered, while in the case of piece-work, the rate of wages 
tended to be lowered by the exceptionally rapid workers, because 
at the given rate it could be shown that they could make more than 
was necessary to maintain their customary standard of living. Under 
these circumstances the workers found that increased efficiency and 
output by members of their immediate group tended to mean not a 
corresponding increase of pay, but less wages for all or more work for 
the same pay; and the only way they would see to prevent overspeed¬ 
ing and the lowering of rates was to set a limit on what any individual 
was allowed to do, in short to limit output until the employes could 
be forced to guarantee increased wages for increased effort and 
output. 

But these things are not sufficient fully to account for the opposi¬ 
tion to scientific management, since the leaders of that movement 
also denounce these abuses. Behind and beneath all this there is an 
essential incompatability between the basic ideals of scientific manage¬ 
ment and those of the dominant type of trade unionism. Scientific 
management can function successfully only on the basis of constant 
and indefinite charge of industrial conditions—the constant adoption 
of new and better processes and methods of production and the 
unrestrained ability to adopt the mechanical, organic, and human 
factors at its disposal to meet the demands of those new production 


WAGE PAYMENT AND PROFIT-SHARING 


783 


processes and methods. On the other hand, trade unionism of the 
dominant type can function successfully only through the maintenance 
of a fixed industrial situation and conditions, extending over a definite 
period of time or through the definite predetermined regulation and 
adjustment of industrial change. Scientific management is essentially 
dynamic in its conception and methods. Trade unionism of the domi¬ 
nant type is effective only when it can secure the strict maintenance 
of the industrial status quo. 

Thus time and motion study means constant and endless change 
in the methods of operation. Not the least of these changes are the 
discovery and adoption of new and more effective operations and 
tasks, the reclassification of the working force to meet the needs of 
these new conditions, the shifting of the individual worker from class to 
class in order to discover the work for which he is best adapted, etc. 
To the unions any change in machinery, processes,. tools, materials 
and products not predetermined or regulated opens the way for new 
classifications of work and workers not covered by the contract and 
thus opens the way by which the employer may seek to overreach the 
men, establish new and lower rates of pay and less advantageous 
conditions of work; in other words to reintroduce competition of 
workman with workman and consequent underbidding among them 
and thus demolish entirely the structure of uniformity which the 
unions have reared. 

Moreover time and motion study means a constant tendency 
toward the break-up of the old established crafts and the substitution 
of specialist workmen in all-round craftsmen. But it is a notorious 
fact that relatively unskilled specialty workers do not make good 
unionists and that efficiency methods of payment tend to center 
the attention and interest of each workman on his own affairs and thus 
to lessen the feeling of mutual interest and common dependence 
among the workers. Under these circumstances the union could not 
long enforce the principle of uniformity against the will of the 
employer.” 

B. Profit-Sharing and Gain-Sharing 
11. WHAT IS PROFIT-SHARING? 1 

The definition of profit-sharing adopted by the International 
Congress on Profit-Sharing held in Paris in 1889 was as follows: 
•“The International Congress is of the opinion that the agreement, 

1 Adapted from Report on Profit-Sharing and Labour Co-Partnership in the 
United Kingdom , pp. 3-4, Cmd. 544, i 9 2 °* 


784 


THE WORKER IN MODERN ECONOMIC SOCIETY 


freely entered into, by which the employee receives a share, fixed in 
advance, of the profits is in harmony with equity and with the essential 
principles underlying all legislation.” Gifts, bonuses on output, 
commission on sales, etc., are not instances of profit sharing which is 
dependent solely on the amount of net profits of the concern itself. 

The most noticeable feature of the statistics of profit-sharing in 
this country (Great Britain) is the large proportion of schemes which 
have ceased to exist. Out of 380 schemes which are known to have 
existed at some time or another, no fewer than 198 have come to an 
end. Only fourteen of the schemes now existing are of more than 
thirty years standing and only 36 were started earlier than the year 
1901. The figures seem to indicate in a very general way that periods 
of activity in the profit-sharing movement coincide with periods (a) of 
good times and ( b ) of industrial unrest. At such times there seems 
to be a recurring tendency on the part of employers to resort to 
profit-sharing as a possible remedy for the unrest. Periods of bad 
employment, on the other hand, are generally also periods of low 
profits, which are, of course, not favourable to the introduction of 
profit-sharing schemes. 

12. AN ANALYSIS OF PROFIT-SHARING SCHEMES 1 

The profits taken into account for the purpose of calculation are 
usually the net profits of the business for the year preceding. In 
some cases a deduction for depreciation and reserve funds is made 
before participation by the employers begins. In a large proportion 
of the profit-sharing schemes, the employes are given a fixed share of 
the divisible profits, the amount falling or rising with the profits. 
In a number of schemes a reserved limit is given to capital and the 
surplus profits above this'are divided pro rata between capital and 
wages, the percentage of the surplus given to the employees ranging 
from 2 per cent to 50 per cent, the latter being the basis in about 
one-half of the cases. A large number of the plans limit participation 
to employees who have been in the employ for a minimum period of 
time, usually either six or twelve months, while sometimes those 
working on commission, at piece-rates, or receiving a relatively high 
salary are excluded. Sometimes too the employee will lose his right 
to participation if found guilty of bad conduct. 

1 Adapted from Report on Profit-Sharing and Labour Co-Partnership in Great 
Britain, Cd. 544, 1920. 


WAGE PAYMENT AND PROFIT-SHARING 


785 


The total bonus to be distributed among the workmen is generally 
divided according to their relative earnings during the period although 
modifications of this are frequently made. The amounts are some¬ 
times paid in cash, sometimes set aside in the form of savings accounts 
and sometimes issued in the form of shares of the company and some¬ 
times in combinations of these three methods. Shares of company 
stock are also frequently provided at favorable terms. Generally 
the firm limits very closely the right of the employer to transfer 
his stock. 

13. GENERAL PRINCIPLES IN AMERICAN 

PROFIT-SHARING 1 

Generally speaking, the method of apportioning the divisible 
profits between capital and labor is determined at the outset by the 
employer, who in most instances announces that a certain fixed 
percentage of the profits, determined in a specified manner, will be 
distributed at the end of the business year among employees eligible 
to participate. 

Frequently, however, the plans merely state that the divisible 
profits will be distributed between capital and labor in proportion as 
the total pay roll is to the total capital invested, it being assumed 
that these two factors—total capital invested and total wages—are 
similar in nature. This method usually results in a distribution 
of the profit-sharing fund in the ratio of about 3 to 1, to capital and 
labor, respectively. For this reason the benefits accruing to em¬ 
ployees, even under the most liberal profit-sharing plans, are not 
very large. 

Under almost one-third of the plans of profit-sharing the dividend 
on the regular earnings of the participants was less than 6 per cent. 
Slightly over one-third of the establishments paid dividends varying 
from 6 to 10 per cent. The remaining third of the establish¬ 
ments paid dividends of 10 per cent or more. Of the latter, five 
establishments paid profit-sharing dividends of 20 per cent or 
more. 2 

1 Adapted from Boris Emmet, “Profit-Sharing in the United States,” Bulletin 
No. 208 of U.S. Bureau of Labor Statistics, pp. 13-14, 37 _ 445 and the same author’s 
article on “Extent of Profit-Sharing in the United States,” Journal of Political 
Economy, XXV (1917), 1023-32. 

3 Bulletin No. 208, p. 19. 


786 


THE WORKER IN MODERN ECONOMIC SOCIETY 


What then is, after all, the raison d'etre of the existing profit- 
sharing schemes. 

1. The advertising value of the schemes, the very name of which 
is high-sounding and appeals to the popular mind. 

2. The nature of some business organizations under which it is 
difficult to correlate directly individual efficiency with its correspond¬ 
ing reward. The value of this factor to the employer was clearly 
brought out by the vice-president of the Executives’ Club of Detroit 
in an article entitled, “ Where Profit-Sharing Fails and Where It 
Succeeds.” The author says: “Considered merely as a stimulus to 
increased production and greater net gain, profit-sharing is of particular 


TABLE XCV 

Percentage of Regular Earnings Received as Share of Profits 
in Thirty-four Profit-Sharing Establishments 


Classified Percentage of Earnings 
Received as Share of Profits 

Under 2. 

2 and under 4. 

4 and under 6. 

6 and under 8. 

8 and under 10. 

10 and under 15. 

15 and under 20. 

20 and under 30. 

30 and under 40. 

40 and under 50. 

50 and over. 


Number of 
Establishments 

I 

... 6 
... 4 

... 7 

••• 5 

••• 5 

1 

1 

2 
1 

... 1 


Total.•. 34 


value in plants where (1) individual efficiency cannot yet be exactly 
measured, or where (2) much work is done far away from supervision, 
or where (3) longevity of service is necessary to preserve the quality 
of the product or to guard trade secrets, or where (4) a supplement 
to the wage system promoting individual efficiency is needed to 
minimize plant waste.” 

3. The effect of the schemes upon the labor turnover. Profit- 
sharing, particularly in the establishments in which the business is 
prospering and in which distributions are made at regular intervals, 
does seem to have a beneficial influence upon the stability of the 
organization. 

4. The momentum of some of the older plans which makes 
profit-sharing a sort of a tradition which is difficult to abandon. 














WAGE PAYMENT AND PROFIT-SHARING 


787 


5. Ihe sense of social justice of some employers. 

6. The belief of some employers that profit-sharing will develop 
good will, diminish industrial strife, and stimulate efficiency, obviating 
at the same time, perhaps, the necessity of granting increases in 
wages. 

An examination of the causes specified by employers as having 
been responsible for the abandonment of profit-sharing plans that they 
are known to have had in operation reveals the interesting fact that 
many of the plans were discontinued because of new order of things 
failed to appeal to the prospective beneficiaries, who preferred the 
certainty of ordinary increases in wages to the uncertainty of the 
potential profits at the end of the distribution period. Demands 
on the part of the new partners for increased wages usually appeared 
unreasonable and unfair to the employer, who quickly decided to 
abandon the scheme. One student of this question has summarized 
the nature of profit-sharing in its bearing upon this conflict of opinion 
as follows: 

It is obvious that if profit-sharing is based upon favor, the so-called 
divisions of profits are nothing more nor less than Christmas presents 
or other periodical gifts, and therefore cannot be considered as a 
serious economic factor. 

If profit-sharing is predicated upon the mutual rights and obliga¬ 
tions arising out of relation of employer and employee, or if it is based 
upon some equitable right or obligation flowing out of that relation, 
it is then permitted to ask at what point in that relation, or under 
what circumstances, does the right to demand an increased wage 
cease and the right to demand a share of profits begin ? 

Unless there is some method of general application by which that 
point may be established, it comes down to this, that the employer— 
and he alone'—can say when, to what extent, and under what circum¬ 
stances the employee shall be permitted to exercise his supposed right—- 
an arrangement which not only makes the employer the umpire, but 
permits him to change the rules in the middle of the game. 

14. A UNIQUE PROFIT-SHARING SYSTEM—THE 
BAKER MANUFACTURING COMPANY 1 

As opposed to the usual basis of distributing profits is the underly¬ 
ing principle of the plan of the Baker Manufacturing Co. of Janesville, 
Wisconsin. It is the opinion of the management of this establishment 

1 Prepared. 



788 THE WORKER IN MODERN ECONOMIC SOCIETY 


that the factor that most nearly resembles wages is not the total 
capital but the interest. “The employer,” states the general manager 
of this firm, “invests his capital and labor its energy. The first gets 
his return in the shape of interest on the investment—the legitimate 
per cent of profit, in our case, 6—the second gets its return in the form 
of daily or monthly wages. These two factors—interest on capital 
and wages—must be paid out of the gross receipts of the undertaking. 
The remainder of the gross profits after allowing all the other legitimate 
expenses constitutes the net earnings of the business, created jointly 
by capital and labor, to be distributed in proportion to the relative 
interests in the business of each of the two partners, namely, amount 
of interest on capital and wages.” 

The object of the plan, however, is not to augment the current 
earnings of the employees, but rather to create for the participating 
employees an annuity to become available at the time when their 
productive powers begin to decline. 

At the beginning of each year an inventory was to be taken 
showing all assets and liabilities, and the net amount by which the 
assets exceeded the liabilities was to be considered the net gain or 
profit of the business for the preceding year after wages and interest 
had been paid. Ten per cent of the net profit was to be set aside as a 
sinking fund, and the remainder to be divided according to the amount 
of wages and interest received. The individual shares of the employees 
are paid 15 per cent in cash and 85 per cent in the common stock of 
the company, only those employees to participate in the profits who 
have been in the company’s employ for at least two years. 

If a loss occurs it is to be drawn from the sinking fund. The 
lowest dividend paid, 28 per cent of total wages, was paid in 1904, 
while the highest, 120 per cent, was paid in 1906. Fourteen times 
out of sixteen the percentage dividend on wages exceeded 60 per cent 
of the regular earnings of the participants. 

The percentage of the total employed that participated in the 
distributed profits during the period of 1899 to 1914 varied from 51 
(the lowest) in 1907 to 85 (the highest) in 1901. In the distribution 
of 1914, 113 or 70 per cent of the total employed, participated. 

As a result of using interest instead of the amount of capital as 
the factor determining the owner’s share, labor has received approxi¬ 
mately three-quarters of the net profits whereas on the other basis it 
would have received only one-sixth. By December 31, 1914, the 
employees of the company had come to own 68 per cent of the common 


WAGE PAYMENT AND PROFIT-SHARING 789 

stock, being in possession of 54 per cent of the entire capitalization 
of the concern. 

15. THE RELATIVE SUCCESS OF PROFIT-SHARING 1 

There have been a few conspicuously successful cases of profit- 
sharing which indicate that if rightly applied, there are many circum¬ 
stances in which it is an excellent method. It has been abandoned, 
however, in so many cases that it needs to be analyzed carefully 
before being either sweepingly advocated or condemned. 

First what is its effect upon production. The protagonists of 
the system claim that the prospect of a share in the profits will not 
only induce individuals to work harder but will lead the group as a 
whole to put pressure upon individual members who may be inclined 
to slack in their work. No doubt this motive does operate frequently, 
particularly in small plants when the workmen are well acquainted 
with each other. It should be remembered, however, that the 
share received by the workmen generally amounts to only a relatively 
small percentage of their annual earnings (generally less than 10 
per cent) and that this is typically paid only once a year. Both the 
smallness of the sum and the fact that its secural is relatively so far 
away weaken the incentive to effort. There is, moreover, little 
connection between individual effort and individual reward. A 
conscientious workman may double his own output yet, because of 
the lethargy of his fellows, come to receive only an infinitesimal addition 
to his income. For the mass of men on the other hand there is the easy 
temptation to depend on others to earn their profits for them. 

Secondly, if what is sought is that profits should be distributed 
according to the relative contributions made to the industry by the 
respective groups, then the justice of profit-sharing may legitimately 
be questioned. The relative amount of profits earned by a business 
is in large part independent of the contributions made by the workers. 
Thus the workmen, anxious to secure profits, might increase their 
efforts only to find at the end of a given year that because of bad 
management or a fall in prices that there were no profits for them. 
The men would thus be deprived of the reward for their toil through 
no fault of their own. Or consider the opposite case. The men might 
not work any harder than before but through excellent management 
or a favorable fluctuation in prices, the firm would make, and they 


1 By Paul H. Douglas. 


7QO 


THE WORKER IN MODERN ECONOMIC SOCIETY 


would share, large profits. Yet this would be a purely fortuitous 
windfall which the workmen at least had not themselves merited. 

Finally, what shall we say of its effect upon sweetening the relation¬ 
ships between employers and workmen ? Rightly conceived it has 
great possibilities in this direction, especially if the profits are dis¬ 
tributed in the form of shares in the company, thus joining the men 
to the company by a double tie. If the confidence of the men is to 
be secured, however, the wages paid must be at least equal to the 
market rate and the plan must not be used to break up the unions. 
Even under these conditions the workmen are likely to regard the 
profits they receive merely as another form of wages and hence to 
feel injured and possibly duped when profits are not earned. Some 
employers, notably Mr. W. P. Hapgood of the Columbia Conserve Co., 
have succeeded in overcoming this by complete frankness and letting 
the workmen know the exact status of the business. If an employer 
with a profit-sharing plan is to avoid distrust and trouble during the 
lean business years he must take pains to see that during the prosperous 
years the workmen thoroughly understand the plan, and he must take 
them into his full confidence so that they know the exact financial 
status of the company every year. 

16. THE PROPER FIELD OF PROFIT-SHARING 1 

Regarded purely as an efficiency method, as a business arrange¬ 
ment for increasing profits by sharing them, the effectiveness of general 
profit sharing is in direct relation to the rank of the participators, 
and in inverse relation to the size of the concern or of the participating 
group. 

a) The opportunity to influence profits is greater among supervising 
employees .—With the position of greater responsibility goes the 
greater influence on profits. Even though his natural ability might 
be as great, the opportunity of the unskilled worker to influence 
profits by increased effort or diminished waste is not so great as that 
of the skilled worker. The high wages of the latter make his time 
more valuable to the employer, and he is intrusted with more expensive 
equipment, machinery and materials. The skilled worker cannot, 
as a rule, affect profits to the same extent as the foreman, since the 
latter, by effective supervision, may increase the output of all those 
under him. Similarly the opportunity of a foreman to influence 

1 Adapted with permission from a collaboration by Arthur W. Burritt, Henry 
S. Dennison, Edwin F. Gay, Ralph E. Heilman, Henry P. Kendall, Profit- 
Sharing—Its Principles and Practice , pp. 4, 6-7, 84, 85. (Harper & Bros., 1918.) 


WAGE PAYMENT AND PROFIT-SHARING 


791 


profits is ordinarily less than that of those who, as members of the 
managerial or executive group, formulate the policies of the business. 

Furthermore, those in the higher salaried positions, generally 
speaking, can more readily see the relationship between their individual 
efforts and the profits account. If profit sharing is to prove a really 
effective incentive it is necessary not only that the activity of partici¬ 
pants shall vitally affect the profits account, but also that they know 
it does, and how it does. 

In the third place employees in managerial positions have a better 
understanding of business uncertainties. This is of importance in 
considering the results of lean years upon the outcome of a profit 
sharing plan. Those who occupy the principal positions are acquainted 
with the conditions producing the poor results. The smallness of 
the earnings is not so likely to destroy their confidence in the profit 
sharing plan; “hard luck” may even give them a stronger sense 
of partnership. But the employees in less important positions are 
more apt to be suspicious of the management and to grow indifferent 
to the promises of profit sharing. Several firms formerly employing 
profit sharing among the rank and file report that they have abandoned 
it because they found that after a poor year it did not produce results. 

Finally the results of individual effort in the managerial group 
are difficult to measure. This renders profit sharing especially 
applicable to them. Much of the work performed by the wage 
earners consists in the repetition of certain motions, or the production 
of a measurable output, and it is possible to know and to recompense 
with certainty the results of each man’s labor. 

b) Relation of profit sharing to the size of the participating group .— 
1. The larger the number the greater is the difficulty of educating 
participants. The successful introduction of profit sharing, especially 
among wage earners, involves a campaign of education which must 
be almost continuous in the early years of the plan, and which can 
never be definitely dropped. Participants must be taught to see the 
relation between their efforts and profits; confidence in the manage¬ 
ment’s intentions must be established; interest in and loyalty to the 
profit sharing feature must be developed. All this requires time, 
constant effort, and patience upon the part of the active management. 
When the group is large the management must do its work at greater 
distance and by less direct methods. The task must be intrusted to 
subordinates. But a feeling of intimacy cannot be conveyed by 
intermediaries; they may even become a bar to mutual understanding. 


792 


THE WORKER IN MODERN ECONOMIC SOCIETY 


2. The larger the group the less is the relative effect of each 
upon profits. 

3. The larger the group, the less is the influence of members 
upon each other. Members of a large group realize that any increased 
efficiency of their own may be offset by the indolence of others. The 
larger the number, therefore, the less is the helpful watchfulness 
of participants upon each other. But it is certain that profit sharing 
cannot function well unless the participant who is known to be 
indolent is in some manner made to feel the disapproval of his fellows 
whose profits he is impairing. As the group increases in size the 
‘Team spirit,” which rests largely upon the moral influence and 
enthusiasm of fellow profit sharers, becomes seriously weakened. 

The effectiveness of profit sharing as an instrument for profit 
making is greatest among high groups and small groups. It is a 
particularly appropriate method of compensating those occupying 
managerial or discretionary positions, for the greater the responsibility 
the larger is the opportunity to influence profits. This is true pro¬ 
gressively from the lowest to the highest grades, in the hierarchy of a 
business organization. While profit sharing may also, under certain 
circumstances, be advantageously introduced among the rank and 
file, it is not believed that in groups of large size it will normally 
operate as a strong incentive to personal efficiency, increased effort, 
care, economies, or cooperation. 

17. GAIN-SHARING 1 

The right solution of this problem will manifestly consist in 
allotting to each member of the organization an interest in that 
portion of the profit fund which is or may be affected by his individual 
efforts or skill, and in protecting this interest against diminution 
resulting from the errors of others, or from extraneous causes not 
under his control. Let us suppose that the principal, wishing to 
enlist the self-interest of his employes to augment the profits of the 
business, should offer to the operatives a proposition somewhat as 
follows: 

“I have already ascertained the cost of our product in labor, 
supplies, economy of material, and such other items as you can influ¬ 
ence. I will undertake to organize and pay for a system whereby 

1 Adapted from an article by Henry R. Towne in the Sixth Annual Report of 
the Bureau of Labor Statistics of the State of Connecticut for the year ending Novem¬ 
ber 30, 1890. 


WAGE PAYMENT AND PROFIT-SHARING 


793 


the cost of product in these same items will be periodically ascertained, 
and will agree to divide among you a certain portion (retaining myself 
the remainder) of any gain, or reduction of cost, which you may 
effect by reason of increased efficiency of labor, or increased economy 
in the use of material, or both; this arrangement not to disturb your 
rates of wages, which are to continue, as at present, those generally 
paid for similar services.” 

The system for which I have adopted the designation of “ gain- 
sharing” aims to recognize and provide for the conditions typified 
by the foregoing supposititious case, and to afford a basis for allotting 
to the employes in a business a share in the gain or benefit accruing 
from their own efforts, without involving in the account the general 
profits or losses of the business. The system is now in actual use, 
as affecting some 300 employes, has been in operation more than two 
years, and is demonstrated to be practical and beneficial. 

The basis or starting-point of the system is an accurate knowledge 
of the present cost of product (or, in the case of a mercantile business, 
the cost of operating it), stating in terms which include the desired 
factors, that is, those which can be influenced or controlled by the 
employes who are to participate in the result, and which exclude 
all other factors. 

As a general rule, it may be stated that in the case of an account 
affecting the operatives in a producing or manufacturing business, 
the following items should be included , viz.: labor at cost, raw mate¬ 
rial, measured by quantity only, for which purpose an arbitrary fixed 
price may be assumed; incidental supplies, such as oil, waste, tools, 
and implements, at cost; cost of power, light, and water, where 
means exist for correctly measuring them, for which purpose it often 
pays to provide local meter; cost of renewals and repairs of plant; 
and, finally, the cost of superintendence, clerk hire, etc., incident to 
the department covered by the system. In like manner the following 
items should be excluded , viz.: market values of raw material, which 
are liable to fluctuation; general expenses whether relating to manage¬ 
ment of works or to commercial administration; and, in general, 
all items over which the operatives can exercise no control or economy. 
Finally, the credit side of the account should be determined by the 
amount of value of product measured by a scale of values fixed in 
advance, and based upon facts previously ascertained. For example, 
if, in a given case, it has been determined by the experience of several 
years that the present cost of product, measured by such items as 


794 


THE WORKER IN MODERN ECONOMIC SOCIETY 


are covered by the inclusive list above stated, is, say, $i per unit 
of product, then the gain-sharing proposition might be formulated as 
follows: The principal would say to the employes, in substance, 
“I will organize the system, will assume the cost of book-keeping and 
other expenses incident to it, and will provide all the facilities reason¬ 
ably required to assist you in reducing the cost of product; I will 
credit the account with the output at the cost price heretofore obtain¬ 
ing, namely $i per unit, and will charge it with the items in the inclus¬ 
ive list; if at the end of the year the credits exceed the charges, I will 
divide the resulting gain, or reduction in cost, with you, retaining 
myself one portion, say one-half, and distributing the other portion 
among you pro rata , on the basis of the wages earned by each during 
the year.” Supposing, then, that at the end of the year it was found 
that the cost per unit of product had been reduced from $i to 95 cents, 
that the total gain thus resulting was $800; and that the aggregate 
wages paid during the year had been $10,000. One-half of the gain 
would be $400, which would equal 4 per cent on the wages fund, so 
that each operative would be entitled to a dividend of 4 per cent 
on his earnings during the year. 

In the practical application of the system several important de¬ 
tails have to be determined, for which no general rule can be laid down. 
Of these the most important is the question of the division of the gain 
or profit between employer and employes. In each of the twenty-one 
gain-sharing contracts which I have thus far instituted, it has seemed 
proper to make this division an equal one, one-half to the principal 
and one-half to the operatives. 

Another important question is the share of the profit fund or 
gain apportioned to the foreman, overseer, or contractor having 
immediate control of the operatives interested under the system. 
Where such person is employed under salary he may share pro rata 
with the operatives, but as this would tend to diminish his share with 
any increase of responsibility due to the need of an increased number 
of subordinates, J prefer to allot to him a definite part of the profit 
fund. Assuming fifty to be the average number of employes under 
one foreman, I regard 10 to 15 per cent of the profit fund as about the 
proper allotment to the foreman, leaving 40 to 35 per cent for his 
subordinates, where 50 per cent is retained by the employer. 

A third point to be considered is the basis of participation on which 
the dividend to the operatives shall be apportioned among them. 
The simplest plan, and the one which I have adopted in practice, 


WAGE PAYMENT AND PROFIT-SHARING 


795 


is to distribute the total fund allotted to the operatives on the basis 
of the actual wages earned by each during the year, including in the 
account every one employed during that time, even if for one day 
only. 

It has been found feasible and very beneficial to have posted in 
each room or department where the gain-sharing system is in force, a 
suitable blank, preferably under glass, on which can be entered each 
month the net results of the system during the preceding month, 
and including a statement of the rate of dividend earned since the 
beginning of the contract year. The stimulus thus given to the 
interests of the employes is very marked. 

Another point of much importance is the question of the length 
of time during which a contract for “gain-sharing” shall continue 
without modification. Its inception is voluntary with the employer, 
and he may impose on the contract any conditions he sees fit, since 
its whole purport is to tender to the employ an interest in excess of 
his stipulated wages, from which it is expected that he will gain an 
increase of his compensation, but under which he cannot possibly 
suffer loss. Such a contract, however, when once definitely entered 
into, is, like other contracts, only amenable to revision by the joint 
consent of both parties to it. 

The length of time which is desirable to adopt for a gain-sharing 
contract depends greatly upon the conditions of the case. When, 
therefore, the cost of product is already accurately known, a gain- 
sharing contract may safely be made for a considerable length of time, 
whereas, when the cost is not well known, it is better to fix its terms 
for a shorter period, in order that they may be revised when the neces¬ 
sary information has been obtained. The best results will be obtained, 
however, when the contract is definitely fixed for a reasonably long 
period, say from three to five years, or even longer. At the expiration 
of a contract, the option and right revert to the employer of revising 
the “contract prices” before offering a renewal of the contract; in 
which event, if during the previous term the cost of production has 
been considerably reduced, he will presumably, although this is not 
always the wisest course, proportionately reduce the contract prices. 
If, therefore, the contract period be short, the employe will naturally 
ask himself whether it is to his interest, for the sake of a small increase 
of compensation during that period, to make increased exertion, in 
view of the fact, at the end of the period, the employer will probably 
again reduce prices to a point where, in order to increase his earnings, 


796 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the employe would have to exert himself even more than at first. 
If, however, the contract price be definitely fixed for a long period, 
the employe can afford, for the sake of present gain, to disregard 
this question as one only affecting a somewhat remote future, and 
to use his best efforts and intelligence to effect a reduction in the cost 
of product. As a result of this the employer will be able, when the 
opportunity for a revision of prices arises, to make a larger reduction 
than he would probably attain in the same time under the plan of 
frequent revisions, and can also then afford to act more liberally 
toward the employes in the matter. 

Gain-sharing may be adapted to industries of almost any kind 
in which it is feasible, by reasonable expenditure, to differentiate 
those elements of cost which can be influenced by the persons who are 
to participate in the resulting gain from those which are beyond such 
influence or control. 

Appendix A gives the results obtained in the case of a number of 
these contracts to which I have applied the gain-sharing system, two 
of these covering a period of two years each. All of the others are 
now running on the second year, but only the results of the first year 
are here stated. The ‘‘contract prices” adopted for these gain- 
sharing accounts were in some cases the actual previous costs, but 
in a majority of cases the contract prices were fixed at rates which 
were a reduction of from io to 20 per cent, and in one case of 30 per 
cent from previous costs. 

APPENDIX A 


Contract 

Number 


1 

2 

3 

4 

5 

7 

8 

9 

10 

15 


Term 

(Years) 

Helpers’ Earnings 

Gain or Loss 

Helpers’ Share* 

Rate of 
Dividend 

5 

$13,080.43 

$3,38$.53 

$850.18 

.065 per c. 

5 

5 

9,216.87 

3,666.34 

*37-59 

840.05 

208.98 

.057 per c. 

3 

4,936.54 

573-58 

148.09 

.03 pez c. 

5 

3 

910.22 
3,861.28 

t 48.52 

537-72 

134-43 

.035 per c. 

3 

1,012.92 

447-59 

III .42 

. 11 per c. 

3 

419-55 

109.04 

27.27 

.065 per c. 

5 

17,696.47 

1,256.37 

318.53 

.018 per c. 

5 

728.53 

358.20 

89.62 

.123 per c 


SECOND YEAR 


1. 


$14,096.05 

$3,251.04 

$817.56 

.058 per c. 

3 . 


3 , 732 . 2 i 

1,027.20 

261.15 

.07 per c. 


* At approximately 25 per cent of gain, 
t Losses. 





































WAGE PAYMENT AND PROFIT-SHARING 


797 


PROBLEMS 

1. What is the difference between time and piece wages? To what types 
of work are each adapted ? Why do some employers favor piece rates 
and others time wages and why ? 

2. It is commonly said that trade unionists oppose piece rates. How 
reconcile this with the fact that the unions of cotton spinners demand 
piece rates and that the coal miners in the past have done so ? Why 
do these and other groups of workmen prefer piece rates ? Why do 
many groups of workmen oppose it ? 

3. What is the Halsey plan and why was it devised ? How does the Rowan 
plan differ from it and why was the modification made ? Discuss these 
systems from the standpoint of (a) production, ( b ) justice in distribution. 

4. What do the Taylor, Gantt, and Emerson systems have in common? 
How do they differ ? Give illustrations of each. Evaluate each and 
point out which you think to be best and why ? 

5. Why does organized labor object to scientific management ? Are 
these objections reasonable or based merely upon prejudice? Why or 
why not ? 

6. How is the base rate determined under scientific management ? How is 
the standard task determined ? On what basis is the percentage-bonus 
given to the workers determined ? To what extent are these so “ scien¬ 
tifically ” determined that collective bargaining is not needed to pro¬ 
tect labor’s share ? 

7. What is the difference between “sharing out of profits” with one’s 
workmen and “sharing according to profits” ? Which is profit-sharing 
as it is standardly accepted ? 

8. Would sharing profits with a few of the leading executives constitute 
profit-sharing ? 

9. Why have firms installed profit-sharing systems and when do they tend 
to institute them ? 

10. Under the various profit-sharing plans, when do the profits which are to 
be divided between employers and employees begin? According to 
what methods are they then divided ? How is the share allotted to labor 
allocated to individual employees? Compare the various methods 
used in each instance and state which you prefer and why ? 

11. “Profits are sometimes distributed in cash and sometimes in stock.” 
What problems are raised in each case ? Which method do you prefer 
and why ? 

12. B, Seebohm Rowntree says any firm installing profit-sharing should 
observe the following principles: (1) the figure taken for capital must be 
a fair one and not one inflated for the purpose; (2) labor’s share of the 
profits must be definitely fixed beforehand and there must be no room 
for manipulation, whether in the setting aside of reserves or by unduly 




i 


798 THE WORKER IN MODERN ECONOMIC SOCIETY 

increasing the reward of direction; (3) labor must have adequate 
means of satisfying itself of the accuracy of the accounts; (4) labor 
must have a legal right to its share of profits and not be given them as 
a bounty; (5) wages must not be less than trade union or other appropri¬ 
ate rates; (6) employees must be free to join a trade union; (7) strikes 
must not be penalized in any way 

Just what do the first four of these provisions mean ? Do you think of 
the various principles stated and why ? 

13. To what extent does profit-sharing operate to increase production? 
Would hard-working individuals get discouraged in working to benefit 
their more careless fellow-workers ? To what extent would there be a 
tendency to let someone else earn your share of the profits for you and 
why ? Would this be greater in a small or large plant and why ? 

14. “Profit-sharing would make the group put pressure on lazy and slovenly 
workers.” Do you agree or disagree and why? 

15. “The principle of profit-sharing is essentially incorrect since the work¬ 
men share in something over which they have little control. Profits 
may go up or down due to other factors and they should not be rewarded 
or punished for this.” Explain this statement in detail and evaluate it. 

16. Why do many profit-sharing plans stir up a great deal of discontent 
during periods of depression ? Should the workmen help the company 
to bear the loss ? 

17. In what ways does H. R. Towne’s plan of gain-sharing furnish incentives 
to production which are absent from profit-sharing ? 

REFERENCES FOR FURTHER READING 

Bowie, J. A., Sharing Profits with Employees 

Bonnett, C. E., Employers' Associations in the United States 

Burritt, Gay, et al., Profit Sharing—Its Principles and Practice 

Cole, G. D. H., The Payment of Wages 

Drury, H. B., Scientific Management 

Emmett, Boris, “Profit-Sharing in the United States,” Bulletin 203. U.S. 

Bureau of Labor Statistics 
Gantt, H. L., Work, Wages, and Profits 

National Industrial Conference Board, “Experience with Works Councils 
in the United States,” Research Report No. 50 
National Industrial Conference Board, “Works Councils in the United 
States,” Research Report No. 21 
Schloss, D. F., Methods of Industrial Remuneration 
Stoddard, W. L., The Shop Committee 
Taylor, F. W., Principles of Scientific Management 
Taylor, F. W., Shop Management 

Wolfe, A. B., Works Committees and Joint Industrial Councils 


PART SEVEN 

THE COMMUNITY’S APPROACH 





































< 


































INTRODUCTION 


In considering the approach of the community to the problems 
raised under modern work relationships we are but continuing and 
amplifying a subject which has been present in all the preceding 
chapters of this text. Certainly the worker and the employer, for 
example, are a part of the community; and, also, very few of the 
acts of either stand in such splendid isolation that they are unaffected 
with a public interest. This part, therefore, should be considered 
in light of that which has gone before, especially Part Two, “The 
Development of Economic Organization,” and Part Five, “The 
Worker’s Approach.” Considered with these “The Community’s 
Approach” should appear organic, and evolutionary. 

The materials as arranged in readings and questions of this part 
will suggest (a) the scope and methods underlying the changing con¬ 
trol of the community, ( b ) the various legislation devised for the pro¬ 
tection of what the community deems fitting and desirable, (c) the 
attitudes of our judicial system toward the status and activities of 
organized labor, and ( d ) the outstanding methods and devices called 
into play by the community to assure industrial peace. 


So i 


CHAPTER XXVI 

SCOPE AND METHOD OF COMMUNITY CONTROL 

The agreement of people is the happy state which makes possible 
the ability to act in common both informally through the mores of the 
group and formally through statutory and common law. But agree¬ 
ment is only one phase of life. The world of experience is so varied 
that social groups inevitably develop conflicts, which in turn may 
produce agitation for change. 

It is a too-obvious and superficial generalization to state that the 
law expresses the will of the people. The modern world finds people 
too busy in most cases with their thousand and one interests to develop 
any particular attitude toward what is, what should be, or what should 
not be the law with regard to the relationships in industrial society. 
If community control is to be understood, we must look farther than 
this generalization and seek to appraise the conflicting philosophies 
of state interference with industry, the part played by minority 
groups, the factors which cause social adjustment to lag behind in the 
race with the ever-changing culture, and the inertia of the law. This 
chapter seeks to suggest some of the forces within the community 
which enter into the problem of social control. 

i. THE LIMITS OF THE PROVINCE OF 
GOVERNMENT 

a ) THE INDIVIDUALISTIC CONCEPTION 1 

All systems either of preference or of restraint, therefore, being 
thus completely taken away, the obvious and simple system of natural 
liberty establishes itself of its own accord. Every man, as long as he 
does not violate the laws of justice, is left perfectly free to pursue his 
own interest in his own way, and to bring both his industry and 
capital in competition with those of any other man, or order of men. 
The sovereign is completely discharged from a duty, in the attempting 
to perform which, he must always be exposed to innumerable delusions, 
and for the proper performance of which no human wisdom or knowl¬ 
edge could ever be sufficient; the duty of superintending the industry 
of private people, and of directing it towards the employment most 

1 Taken with permission from Adam Smith, The Wealth of Nations , Book IV 
(Cannan edit.), Vol. IV, pp. 184-85. (G. P. Putnam’s Sons.) 

802 


SCOPE AND METHOD OF COMMUNITY CONTROL 803 


suitable to the interest of society. According to the system of natural 
liberty, the sovereign has only three duties to attend to; three duties 
of great importance, indeed, but plain and intelligible to common 
understandings: first, the duty of protecting the society from the 
violence and invasion of other independent societies; secondly, the 
duty of protecting, as far as possible, every member of the society 
from the injustice or oppression of every other member of it, or the 
duty of establishing the exact administration of justice; and, thirdly, 
the duty of erecting and maintaining certain public works and certain 
public institutions, which it can never be for the interest of any 
individual, or small number of individuals, to erect and maintain; 
because the profit could never repay the expense of any individual or 
small number of individuals, though it may frequently do much more 
than repay it to a great society. 

b ) THE COLLECTIVIST CONCEPTION 1 

Collectivism is the general doctrine that the welfare of the individ¬ 
ual is best conserved and prompted by action by the political state 
in the economic sphere. 2 The term is opposed to individualism, the 
theory that the economic field should be left to the free interplay of 
individual forces. 

Obviously the opposing terms, individualism and collectivism , as 
practically used , are relative rather than absolute in their meaning. 
No advocate of individualism believes that the economic field should 
be entirely exempt from social regulation, and no collectivist advo¬ 
cates the transfer of all economic initiative from the individual to 
society. But the individualist commonly is opposed to further 
socialization of industry and often feels that the process has already 
proceeded too far, whereas the collectivist believes that many of the 
more important economic functions now under private control should 
be'assumed by the state. 

Though in one form or another the conflict between individualism 
and collectivism is common to all history, the emergence of the 
particular forms of these respective doctrines in modern times is 
clearly contingent upon the rise and progress of the Industrial Revolu¬ 
tion. In the early days of the machine era it became apparent that 
the methods of the state inherited, in a large part, from the feudal 

1 Prepared by Willard E. Atkins. 

2 Aside from state collectivism it is possible, of course, to have a pluralism apart 
from the political state, consisting of the grouping of individuals for the purpose 
of self-government and self-control. Guild socialism may be cited as an illustration. 


8 04 


THE WORKER IN MODERN ECONOMIC SOCIETY 


regime, were ill adapted to the growth of industry and trade. Con¬ 
sequently the clamor of the rising middle class was for freedom from 
state interference. But with the further evolution of the industrial 
era, the seeming failure of social welfare to keep pace with the enor¬ 
mous strides in productive power naturally directed attention of 
many to various forms of collective action in order to secure what 
they considered a greater measure of justice and a fairer portion of 
the product of industry. It is not without significance that the 
doctrine of individualism received its first classical expression by 
Adam Smith in the latter part of the eighteenth century, while the 
doctrine of collectivism received its most famous expression by Karl 
Marx in the middle of the nineteenth. 

From the order of historic emergence, the writer is not implying 
that individualism is an outgrown doctrine applicable only to the 
earlier conditions of the industrial era. But in the evolution of 
modern democracy, it was inevitable that the working class, deprived 
of their ownership of the tools of production and weak in bargaining 
power, should develop a faith in cpllective bargaining along with 
their growing class consciousness. And since collective bargaining 
has obtained for the worker only a fraction of the securities and 
advantages for which he has reached, it naturally follows that many 
laboring groups are turning more and more to the theories of collective 
ownership and management of industry—theories which tend to carry 
the principle of collectivism to its logical extreme, and perhaps to its 
redudio ad absurdum. 

Doubtless, too, the main tendencies of capitalistic development 
have played into the hands of the collectivist theorists. The more 
extreme opponents of collectivism are likely to contend, and believe, 
that they are championing the rights of the individual when, in reality, 
they are simply pleading for non-interference with the natural develop¬ 
ment of capitalism, a development which has been characterized in 
the main by a drift from the relative early individualistic competition 
toward co-ordination, combination, and often the extinction of the 
small capitalist, a process in which the freedom of action of the many 
individual capitalists has been largely surrendered in return for the 
economies of large-scale production. 

From the evidence already afforded by the development of capital¬ 
istic society, the impossibility of restricting the collective functions to 
a few unimportant and innocuous fields is quite evident. According 
to Adam Smith the duties of the sovereign, and hence by implication 
of the sovereign state, are three: the protection of the particular 


SCOPE AND METHOD OF COMMUNITY CONTROL 805 


society from other independent societies; the maintenance of justice 
among the members of the society; and finally the erection and 
maintenance of certain public works and institutions which private 
industry would not find profitable. It is now clear that all these 
restricted functions are likely to be greatly extended under the pressure 
of actual events. Obviously, the state must take some cognizance 
of industrial developments, such as the exploitation of foreign markets, 
which may, in turn, provoke war; and once war has been declared, the 
state finds it necessary to assume all sorts of economic functions 
usually left to private enterprise, because modern war is not a seg¬ 
regated tournament between military groups, but the pitting of the 
total resources of one country against those of another. Obviously, 
too, the requirements of the administration of justice must force 
the state to commit itself to social policies when the major disputes 
to be settled are not between isolated individuals but between power¬ 
ful groups of associated individuals. And finally, it is quite impossible 
to set even approximate limits to the number and quality of institu¬ 
tions which the state may find it necessary or expedient to erect and 
maintain. The devastation wrought by contagious diseases soon 
forces the recognition of the fact that no amount of personal enlighten¬ 
ment and caution can protect the individual’s health from the 
encroachments of an ignorant or careless community; and when the 
state assumes responsibility for public health, public hospitals are 
sure to come into conflict with private hospitals, and public play¬ 
grounds with private amusement parks. Thus in these, and in 
myriad other ways, modern governments are forced into the unfore¬ 
seen and awkward assumption of ever-widening collective functions. 

While these changes go on, those who accept the doctrine of collect¬ 
ivism are likely to emphasize three main points on mooted questions: 

1. They feel that the principle of protection should apply not only 
to defectives and dependents, but to all individuals. They contend 
that the individual with his necessarily limited knowledge, limited 
leisure, and limited energy, is usually a poorer judge of the essentials 
of his own welfare than is the collective wisdom of the community. 
Moreover, they would subscribe to what the individualist would 
call a restriction of the freedom of contract, contending that freedom 
in bargaining with the modern corporation, for example, is often 
nothing other than an ironic misnomer. 

2. They assert a preference for collective as contrasted with 
individual or private action. The thoroughgoing collectivist con¬ 
tends that the inefficiency of government enterprise has been greatly 


8 o6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


exaggerated, and that such inefficiency as there is, results from govern¬ 
mental inexperience and the opposition of private enterprise rather 
than from intrinsic inadaptability of government to matters economic. 

3. Finally, as the most important principle of collectivism, they 
subscribe to equalization of opportunity among individuals. The 
collectivists believe that the true welfare of the individual must be 
derived from the welfare of society itself. They feel that the gross 
inequalities of wealth resulting from a false individualism constitute 
the greatest restriction upon the free self-development of the individ¬ 
ual, and consequently that individualism itself can be realized only 
through collectivism. 

To state their position is but to indicate that the goals of the 
individualists and the collectivists possess much in common: the chief 
difference exists in the faith as to the road leading to such goals. 

2. MODES OF COMMUNITY ACTION 

a) INTRODUCTORY 

Back of all innovations in law, in court interpretation and in 
enforcement, lies, of course, some new crystallization of public opinion 
and the work of some agitating group. Sometimes the group seems 
to be very representative of the community as a whole, acting merely 
as the mouthpiece of a general desire; more often, it speaks obviously 
for only a small clientele, while the rest of the community tacitly 
gives assent or more often pays no attention either way. 

The most striking type of the small but compact agitating group 
is, of course, the legislative “lobby.” Such a lobby may be working 
for the narrowest of special interest or it may be working for the broad¬ 
est of public ends. Its methods must be those of propaganda in 
either case. More and more the members of “general-interest” 
groups—i.e., “reformers” of all kinds—are coming to realize this. 
In matters of industrial reform, especially, the keenest sufferers from 
existing abuses—the poor and the ignorant—are apt to be the least 
able to agitate for themselves. Upper-class labor and avowed 
“general-interest” groups must champion the cause of lower-class 
labor, if the latter is to be heard in a commanding fashion. 

b) THE OPERATION OR SPECIAL INTEREST GROUPS: THE 
INSURANCE LOBBY IN CONGRESS 1 

The Fitzgerald accident compensation bill for private employees 
in the District of Columbia—although introduced as long ago as 

1 Adapted with permission from article by Irene Sylvester Chubb, in the 
American Labor Legislation Review (September, 1922), pp. 162-67, 168-69. 


SCOPE AND METHOD OF COMMUNITY CONTROL 807 

April, 1921—was still pending when Congress adjourned in September, 
1922. The time is now ripe for the public to know the real forces 
which are delaying action in this case. 

The only serious opposition to the Fitzgerald bill is instigated and 
promoted by the casualty insurance interests. At the hearings in 
Washington, insurance interests were represented by their most highly 
paid lobbyists. Their opposition appeared in various guises. Their 
leading speaker was the manager of the “Workmen’s Compensation 
Publicity Bureau”—an organization supported by a number of large 
casualty insurance companies. This organization also circularized 
Congress with two elaborate and expensive pamphlets attacking the 
bill. Several other speakers who appeared, avowedly to represent 
civic welfare organizations, were later found to be in the employ of 
commercial insurance interests. 

» 

Meanwhile, the chairman of the Committee introduced a rival 
bill desired by the casualty insurance interests. That failing, he 
attempted to load the original bill with pernicious amendments and 
delayed and redelayed his committee meetings. Finally the House 
committee came together in the absence of the chairman and in 
exasperation instructed him to make the Fitzgerald bill the order of 
business on the following Monday. 

Immediately, insurance men redoubled their hostility. Tele¬ 
grams poured in, and on the appointed Monday the distribution of 
affirmative time for the bill was placed in the hands of a congressman 
opposed to this measure! Filibustering on the floor of the House 

continued and the debate could not be finished.The bill 

still remains “unfinished business” on the House Calendar for the 
coming session. Speakers, telegrams, letters and pamphlets had 
done their work. 

SAMPLE OF A LETTER SENT OUT BY THE INSURANCE LOBBY 

Kansas Association of Insurance Agents 

Topeka, Kansas, June 21, 1922 

Congressman “Poly” Tincher 
Washington , D.C. 

Honorable Sir: 

Please be present at the meeting of the Committee of the Whole House 
on the 26th instant and subsequent days when House Resolution No. 10034, 
known as the Fitzgerald Bill, is considered. 

Please support a motion to substitute the Underhill Bill for the Fitz¬ 
gerald Bill after the enacting clause of the last has been read. If that 
fails, then support the Underhill amendments to the Fitzgerald Bill 
eliminating the Monopolistic State Fund feature. If that fails, then vote 


8 o8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


against the Fitzgerald Bill in the Committee of the Whole House. If 
that fails, then vote against the Fitzgerald Bill on the floor of the House 
when it is reported from the Committee of the Whole House. 

The insurance agents of the State of Kansas are opposed to the Fitz¬ 
gerald Bill without a dissenting voice. We will appreciate your support 
in being present and defeating this measure. 

Very truly yours, 

C. G. Blakely, Jr., Secretary 

June 23, 1922 

Mr. C. G. Blakely , Jr. 

Kansas Association of Insurance Agents 
Topeka , Kansas 
My Dear Blakely: 

Answering your letter of June 21, which is one of the most unique 
letters I have ever received. 

.... I want to compliment you upon your thorough knowledge of 
the several steps that are liable to be taken in this matter, and to assure 
you that I am always glad to be able to be of service to the insurance 
agents of the state of Kansas. 

Yours truly, 

J. N. Tincher 

P.S.—You overlooked one thing in your letter; you didn’t tell me 
what to be thinking between the different motions. 

c) THE ROLE OE PUBLIC INTEREST GROUPS AND HIGHER 
CLASS LABOR IN DEFENDING LOWER CLASS LABOR 

i. The New York Shirtwaist Makers’ Strike , ipop 1 

Curiously enough, it was a sub-contractor who started the strike. 
This man, because he (< was sick of slave-driving ,” protested to the 
manager, saying he wanted to go and take his girls with him. He 
was not allowed to speak to the girls after he had expressed himself, 
but was set upon and dragged out of the shop—the original “assault.” 
As he was dragged along he shouted, “Will you stay at your machines 
and see a fellow worker treated this way?” And impulsively 400 
operators dropped their work and walked out. 

Most of the pickets, also, interviewed by the committee stated 
that they themselves were earning from twelve to fifteen dollars a 
week, but they struck in behalf of those poor girls under the sub¬ 
contractors who were getting only five dollars a week. 

A vast amount of publicity in behalf of the girls was secured by 
the entrance into the field of the Women’s Trade Union League and other 

1 Adapted from articles and editorial in the Survey , November and December, 
1909, and January, 1910. 


I 


SCOPE AND METHOD OF COMMUNITY CONTROL 809 

interested people , largely women settlement workers, which resulted 
in the arrest of their president, Miss Mary Dreier of Brooklyn. These 
volunteer workers have formed themselves into an organized patrol, 
six or eight of whom place themselves in front of the shop at opening 
and closing • time, looking after the rights of the girls and going to 
court as witnesses with strikers who are arrested. Miss Dreier was 
discharged upon arrival at the nearest station house, and the police 
attitude toward the women was deliciously revealed when the officer 
in charge upbraided her for not having told him that she was ‘The 
rich working girls’ friend,” had he known which, of course, he would 
not have arrested her. 

It is a good thing for the sake of public sympathy that policemen 
and magistrates should have been thought to be unduly severe in 
suppressing picketing; that girls whose disorderly conduct consists 
of attempting to persuade other girls not to take the place of strikers 
should have been put into prison in the enforced company of women 
whose disorderly conduct is that of the common prostitute, and that 
all this should have occurred in the center of Manhattan Island, where 
women of wealth and social position, and college women could easily 
come into personal touch with it. 

ii. The Consumers’ League Campaign against Low Wages 1 

These young workers cannot be left to fight their own battle for 
wages. The young clerks and cash children, the bundle wrappers and 
change makers in our stores afford no material of which militant 
unions can be formed. Whatever safeguarding is to be theirs must 
come to them from without, from the consuming public. 

Every gain hitherto made in behalf of the store employees has met 
energetic opposition from association of merchants, who systematically 
fight the establishment of standards of hours or wages. This industry 
is kept in its subnormal, parasite condition by deliberate intention 
of merchants who are among the ablest business men of America. 
Their organization, formed after the Reinhardt Commission investiga¬ 
tion, in 1896, in New York City, has been maintained and strengthened 
and imitated in scores of cities for the purpose of fighting all encroach¬ 
ment upon freedom of exploitation. 

Similarly with the tenement house industries. Here, too, as in 
the retail stores, society cannot afford to delegate to the trade unions 

1 Adapted with permission from Mrs. Florence Kelly, “Minimum Wage 
Boards,” American Journal of Sociology (November, 1911), pp. 303-14. 


8 io 


THE WORKER IN MODERN ECONOMIC SOCIETY 


a task which they cannot justly be asked to perform. Tenement- 
house workers have never anywhere been able to form a lasting union. 
Differences of language, nationality, race, religion, sex, age, and skill 
make an effective union among them unthinkable. Society itself 
must build the floor beneath their feet. 

Beyond and below the stores and tenement workrooms stand the 
cotton-mills. The cotton trade is farthest below the normal level. 
It stretches continuously along the Atlantic Coast from New Orleans 
to Maine. It exhibits the same product of wholesale, chronic poverty 
under high protection in America, as in England under free trade. It 
is not an accident that New Orleans and Fall River, at opposite ends 
of the cotton coast, have the worst death rates for cities of their 
respective sizes in the census of 1900. The cotton-mills suck the 
whole family into industry. The cotton industry everywhere, and at 
all times, pays such low wages that wives and children must eke out 
the family subsistence. Its regular accompaniments are child labor, 
employment of married women, long hours alternating with curtail¬ 
ment, poverty, illiteracy, and tuberculosis. 

The cotton industry actively strives to prevent legislative progress. 
It fights the establishment of standards. In not one cotton-mill 
does the eight-hour day obtain. 1 In no state dominated by the tex¬ 
tiles is there a statutory eight-hour day, even for the children. It is 
in New Hampshire, a cotton-manufacturing state, that we find a new 
law of 1911 for a minimum age for children in factories, out of school 
hours, fixed at twelve years, when all other northern states have 
adopted fourteen years as the minimum. It is the cotton industry 
which led the recent unsuccessful fight against the women’s fifty-four- 
hour bill in Massachusetts, and induced Governor Blease to veto the 
appropriation for factory inspectors in South Carolina. 

It is an active cotton lobby that keeps Georgia from freeing its 
eight-, nine-, and ten-year-old children from working sixty-six hours 
a week and eleven hours a day. It is the cotton lobby which prolongs 
the life of the law under which fifty cotton-mills employing young 
children worked at night, in the winter of 1911, in North Carolina. 
It killed the women’s fifty-four-hour bill in New Jersey. 

Before the New York legislature of 1911, the garment manu¬ 
facturers from Troy and the cotton-mill men from Cohoes and Utica 
appeared together to oppose the women’s fifty-four-hour bill, upon 
the plea that the workers could not live upon their earnings if their 
working day was shortened—the same plea that is urged against shorter 

1 This was written in 1911. 


SCOPE AND METHOD OF COMMUNITY'CONTROL 8ii 

hours for little children in Georgia, where they work sixty-six hours a 
week. Could there be a more convincing argument for minimum-wage 
boards than this hypocrisy ? We shall meet the cotton lobby before 
legislatures North and South, fighting against the passage of minimum- 
wage-board-laws. 

[Note: Space does not permit the development of the effects of 
magazine articles, speeches before colleges and associations, the 
coercing of newspapers through the withdrawal of advertising, and 
the multitude of methods brought into play by various agitating 
groups to control legislative action.— Ed.] 

3. THE LAG IN SOCIAL ADJUSTMENT 1 

This rapidity of change in modern times raises the very important 
question of social adjustment. Where one part of culture changes 
first, through some discovery or invention, and occasions changes 
in some part of culture dependent upon it, there frequently is a delay 
in the changes occasioned in the dependent part of culture. The * 
extent of this lag will vary according to the nature of the cultural 
material, but may exist for a considerable number of years, during 
which time there may be said to be a maladjustment. These causes 
may be cited as follows: 

a) Scarcity of invention in the adaptive culture. Sometimes, the 
adaption of a culture to changed material conditions necessitates what 
might be called an invention in the adaptive culture. The growth of 
industrial accidents because of the use of modern machines necessitated 
an invention in the adaptive culture, which is called workmen’s 
compensation. 

b) Mechanical obstacles to adaptive changes. What is perhaps 
more frequently true is that the invention in adaptive culture is 
known, but there is difficulty in getting the invention adopted. 
Someone in comparing invention and diffusion has made the remark 
that it is easier to spread butter than it is to make it. It is not, 
however, as easy to spread culture as it is to spread butter. A good 
deal of resistance of culture to change exists, for instance, in habit, 
love of the past, and various utilities of the old culture. There does 
seem to be, however, at times a purely physical or mechanical obstacle 
to the spread of some forms of culture. For instance, in the United 
States most state legislatures meet only every two years and frequently 

1 Adapted with permission from William F. Ogburn, Social Change (B. W. 
Iluebsch, Inc.), 1922, pp. 200, 201, 257, 258, 259, 260, 261-64. 



8l2 


THE WORKER IN MODERN ECONOMIC SOCIETY 


for short and limited periods. For this reason alone it takes some time 
for statutory enactments to spread throughout the states. More¬ 
over, in a democracy such as we have in the United States, the people 
have to become familiar with proposed reforms before they are 
sanctioned. This takes time, as every practical reformer knows. 
It involves setting up extensive machinery of education and propa¬ 
ganda. Indeed the obstacles to the spread of any invention in the 
non-material culture are many. 

c) The heterogeneity of society. A great many of these special 
obstacles to changes arise because society is heterogeneous, con¬ 
sisting of many classes and groups. The need of the change in the 
adaptive culture is felt by only one class or group, whereas the change 
must be made by the society as a whole. For instance, workmen’s 
compensation laws are passed by representatives of the whole group, 
whereas they apply to only a special class in the whole group. Very 
probably if the whole group were made up exclusively of workers 
liable to injury in industry, there would not have been so long a delay 
'in the adoption of such laws. Changes in the adaptive culture work 
at times for the interests of one group but against the interests of 
another group. A great many proposed reforms today are for the 
purpose of providing better adjustments for classes who are not the 
rich and powerful classes. Many of these proposed reforms, such 
as remedies for unemployment, cost money which must be raised by 
taxation or fall as a burden on the wealthier classes, who do not appear 
to derive a special benefit from them. 

d) The closeness of contact with material culture. Another general 
reason why the adaptive portions of the non-material culture lag 
behind the changes in the material culture is the fact that the relation¬ 
ship between the adaptive culture and the material culture is not very 
close, but several steps removed. Thus the form of a city govern¬ 
ment is not so close to industry as the corporate organization of indus¬ 
try itself. And a general philosophy like the laissez faire doctrine 
is a little further removed from the machinery of industry than are 
labor policies. Governmental organizations would be expected to 
adjust themselves somewhat more slowly to industrial changes than 
organizations of labor and capital. 

e) The connection of the adaptive culture with other parts of culture. 
Another cause of delay in the adjustments is the fact that the particular 
adaptive culture is sometimes correlated with some other part of the 
non-material culture. The mores of exploitation may be related to 
business in general as well as to a particular situation like forestry. 


SCOPE AND METHOD OF COMMUNITY CONTROL 813 

If exploitation continues a good policy in business though not in 
forestry, presumably exploitation in regard to forestry would be more 
difficult to change because the exploitation is a general policy which 
continues satisfactorily applicable to other parts of culture such as 
business. 

/) Group valuations. Still another reason why some forms of 
non-material culture are slow to change appears to be the strong 
position they occupy in the valuations of the group. This is particu¬ 
larly true of morals, mores, and some customs. Customs become 
mores because of the strong approval of them as a policy by the 
group. The group decides that certain ways of doing things are 
right, and there is group pressure to enforce conformity. Thus the 
family, the Constitution of the United States, a political party, 
individualism, monogamy, all seem to be protected by a group pressure 
or approval which constitutes a distinct force operating at least for a 
time against modification. This is what is meant by the saying that 
institutionalism resists change. 

4. THE SOCIALIZATION OF LAW 1 

A developed legal system is made up of two elements, a traditional 
element and an enacted or imperative element. Although at present 
the balance in our law is shifting gradually to the side of the enacted 
element, the traditional element is still by far the more important. 
In the first instance, we must rely upon it to meet all new problems, 
for the legislator acts only after they attract attention. But even 
after the legislator has acted, it is seldom if ever that his foresight 
extends to all the details of his problem or that he is able to do more 
than provide a broad, if not a crude, outline. Hence, even in the 
field of the enacted law, the traditional element of the legal system 
plays a chief part. We must rely upon it to fill the gaps in legislation, 
to develop the principles introduced by legislation, and to interpret 
them. 

Moreover, a large field is always unappropriated by enactment, 
and here the traditional element is supreme. In this part of the law, 
fundamental ideas change slowly. The alterations wrought here and 
there by legislation, not always consistent with one another, do not 
produce a general advance. Indeed, they may be held back, at times, 
in the interests, real or supposed, of uniformity and consistency, 
through the influence of traditional element. It is obvious, therefore, 

1 Adapted with permission from Roscoe Pound, “ Social Problems and the 
Courts,” American Journal of Sociology, XVIII (1912-13), 334-38* 


814 THE WORKER IN MODERN ECONOMIC SOCIETY 

that above all else, the condition of the law depends upon the condition 
of this element of the legal system. If the traditional element of the 
law will not hear of new ethical ideas, or will not hear of the usages 
of the mercantile community, or will not hear of new economics or 
of the tenets of the modern social sciences, legislation will long beat its 
ineffectual wings in vain. 

If, however, the causes of the backwardness of the law with respect 
to social problems and the unsocial attitude of the law toward ques¬ 
tions of great import in the modern community are to be found in the 
traditional element of the legal system, the surest means of deliverance 
are to be found there also. The infusion of morals into the law through 
the development of equity was not an achievement of legislation, but 
the work of the courts. The absorption of the usages of merchants 
into the law was not brought about by statutes, but by judicial 
decisions. When once the current of juristic thought and judicial 
decision is turned into the new course, our Anglo-American method of 
judicial empiricism has always proved adequate. 

There are many signs that fundamental changes are taking place 
in our legal system and that a shifting is in progress from the indi¬ 
vidualist justice of the nineteenth century, which has passed so sig¬ 
nificantly by the name of legal justice, to the social justice of today. 

Six noteworthy changes in the law, which are in the spirit of recent 
ethics, recent philosophy, and recent political thought, may be referred 
to. First among these we may note limitations on the use of property, 
attempts to prevent the anti-social exercise of rights. 

Second, we may note limitations upon freedom of contract, such 
as requirement of payment of wages in cash, regulations of hours and 
conditions of labor, and limitations upon the power of employers to 
restrain membership in unions. These have been matters of legis¬ 
lation. But our courts have taken the law of insurance practically 
out of the law of suretyship, and have established that the duties of 
public service companies are not contractual, flowing from agreements, 
but are quasi-contractual, flowing from the calling in which the public 
servant is engaged. Not merely in labor legislation, but in judicial 
decision with respect to public callings, the whole course of modern 
law is belying the famous individualist generalization of the nineteenth 
century that the growth of law is a progress from status to contract.- 

Third, we may note limitations on the power of disposing of prop¬ 
erty. These are chiefly legislative. Examples are the requirement 
in many states that the wife join in a conveyance of the family home; 
the statutes in some jurisdictions requiring the wife to join in a 


SCOPE AND METHOD OF COMMUNITY CONTROL 815 

mortgage of household goods; the statute of Massachusetts requiring 
the wife to join in an assignment of the husband’s wages. 

Fourth, reference may be made to limitations upon the power of 
the creditor or injured party to secure satisfaction. In the United 
States, the homestead exemption statutes which prevail in so many 
states, and the personalty exemptions which in some states go so 
far as to exempt five hundred dollars to the head of the family, and 
usually make liberal exemptions of tools to the artisan, library to the 
professional man, animals and implements to the farmer, and wages 
to the head of a family, will serve as illustrations. There is a notable 
tendency in recent legislation and in recent discussion to insist, not 
that the debtor keep faith in all cases, even if it ruin him and his 
family, but that the creditor must take a risk also—either along with 
or even in some cases instead of, the debtor. 

Fifth, there is a tendency to revive the primitive idea of liability 
without fault, not only in the form of wide responsibility for agencies 
employed, but in placing upon an enterprise the burden of repairing 
injuries incident to the undertaking without fault of him who conducts 
it. What Dean Ames called “the unmoral standard of acting at 
one’s peril” is coming back into the law in the form of employers’ 
liability and workmen’s compensation. There is a strong and growing 
tendency, where there is no blame on either side, to ask, in view of the 
exigencies of social justice, who can best bear the loss. 

Finally, recent legislation, and to some extent, judicial decision 
have begun to change the old attitude of the law with respect to 
dependent members of the household. Courts no longer make the 
natural rights of parents with respect to children the chief basis of 
their decisions. The individual interest of parents which used to be 
the one thing regarded has come to be almost the last thing regarded 
as compared with the interest of the child and the interest of society 
In other words, here also social interests are now chiefly regarded. 

PROBLEMS 

1. Much of our labor legislation has occurred comparatively recently. 
How do you explain this fact ? 

2. What concern has society in the status and progress of the worker? 

3. “Most labor problems, so called, will be solved by letting competition 
work itself out.” “To allow competition to settle our labor questions 
is to invite chaos.” Discuss. 

5. “Protection of the individual by the group may constitute a defense 
to individual liberty rather than an invasion of that right.” Can this 
be true ? 


8i6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


6. What meaning lies in the phrases: ( a ) “The Creed of the Individual¬ 
ist”; ( b ) “The Creed of the Collectivist” ? 

7. Do the following seem to be proper fields for state interference through 
law: ( a) unemployment compensation, ( b ) wages, ( c) hours of work, 
(d) housing conditions, ( e) home work, (/) thrift, ( g ) hiring and firing 
workers, ( h ) morality among employees, ( i) political freedom of 
workers, (j) blacklisting, ( k ) striking, (/) frequency of wage payment, 
(m) vocational guidance, ( n ) ventilation, ( 0 ) sickness insurance? 
What are your standards of judgment ? 

8 . Is the interference of the state on an increasing scale proof of the fact 
that individual bargaining has no merits ? 

9. The state in the given case can take the following attitudes toward 
specific problems: (a) deal with evils piecemeal as they arise; ( b ) regu¬ 
late everything, particularly industry; (c) try the individualistic 
solution which would draw a sharp line between the sphere of the 
individual and the sphere of the state; ( d ) adopt the theory of organic 
unity. 

Criticize each of these theories of state action. 

10. “Laissez faire means free play to the doctrine of evolution. Under its 
regime the fittest will survive.” Criticize. 

11. Some people have said that our laws today are more applicable to 
eighteenth-century conditions than to those of the twentieth century. 
What bases are there for such criticism ? • 

12. Granted that the employer possesses superior bargaining power does it 
necessarily follow that society should interfere to equalize the situa¬ 
tion? As far as society is concerned are there evil consequences 
arising from unequal bargaining situations ? 

13. “Capital has been relieved of many of its risks; the worker is left to 
shift for himself.” Is this a proper characterization ? 

14. “The labor market stands out as a startling example of an unorganized 
market/ Commodity markets are highly organized.” Grant the 
truth of the above, is it a matter of social concern ? 

15. What is the justification for a law providing that machinery should be 
safeguarded ? 

16. A state passes a law that employees shall be paid their wages at least 
each second week. How do you justify such legislative interference ? 

17. Should a state concern itself with attempting to secure decency and 
morality among employees through legislation ? 

18. Should compulsory or optional laws be the basis of legislation in the 
fields of workmen’s compensation and minimum wages for women? 
Why? 

19. How do you account for the fact that the United States has not con¬ 
cerned itself with sickness insurance to the degree certain foreign 
countries have ? 


SCOPE AND METHOD OF COMMUNITY CONTROL 817 

20. “If we are to control our industrial problems, we must control popu¬ 
lation.” Do you agree ? 

21. Do you agree with the statement that American workers will not be 
class-conscious until misery is more widespread ? Why, or why not ? 

22. Would social action promise more if workers belonged to a single and 
not to many groups ? What are the advantages of a group or class 
viewpoint ? 

23. How do the following facts make it difficult for the community to 
devise methods of control when problems arise: ( a ) the presence of 
large immigrant groups; ( b ) wage-earning versus employing classes; 
(c) agricultural versus distributing groups; (d) educated versus 
uneducated groups. 

24. How do you account for the fact that the attitude toward child labor 
among certain communities in the South tends to differ from that of 
many communities in the North ? 

25. Among the factors influencing the course of action the community takes 
are, (a) morality, ( b ) education, (c) ceremony, ( d ) fashion, ( e ) tradi¬ 
tion, (J) sympathy, ( g ) custom, (h), sense of justice, ( i ) the crowd, 
( j ) the law, (k) public opinion, (/) suggestion, (m) religion. 

Try to enlarge this list and weigh the influence of each factor. 

26. “Back of community action in a given case lies the entire social herit¬ 
age of the community.” What content is there in the phrase “the 
social heritage of the community”? What has this social heritage 
to do with community action ? 

27. How do communities develop standards and ideals? How do you 
account for varying standards and ideals in different communities ? 

28. Who are the more powerful in determining the course of legislation and 
what makes them powerful: (a) graduate students engaged in research 
in the field of industrial relations; ( b ) members of governmental 
investigating committees; ( c ) a United States senator; (< d ) an employer 
of many workers; ( e) a labor leader; (J) social service workers? 

29. Distinguish between public opinion, advertising, and propaganda 
as means and forms of social control. 

30. “The newspapers are common carriers.” How valid is this state¬ 
ment ? 

31. “Informal social control is necessary to formal social control.” Criti¬ 
cize. Can you cite instances ? 


CHAPTER XXVII 
PROTECTIVE LEGISLATION 
i. INTRODUCTION 1 

It was the belief of the classical economists and their followers that 
the state should keep its hands off industry and that all parties should 
be free to bargain as they saw fit. This belief was due in part to a 
revolt against the detailed, exacting, and often vicious regulations of 
the state when swayed by the mercantilistic theory; it was due in 
part to a belief in a beneficent order of nature in which it was necessary 
only to allow men to do as they wished and all would be well. (This was 
expressed by Adam Smith when he said that men in seeking their own 
interest were “led as by an invisible hand” to promote the interest 
of all.) It was due in part (in its later stages) to a reluctance to imperil 
the success of manufacturing and commerce then rapidly growing in 
extent and power. 

The abuses of the factory system, however, showed that the right 
of free contract was not sufficient to protect the worker and that 
frightful abuses in woman, child, and even adult male labor necessarily 
resulted. After much pressure from the humanitarians, effective 
factory legislation began to be passed in the i83o’s and 40’s in England, 
although some legislation had been passed previously. This legislation 
was opposed by many of the economists and by many Liberals who 
believed in individualism, such as John Bright. In the United States, 
labor legislation has been slower to develop than in any other industrial 
country. This has been partially due to the fact that it has been only 
comparatively recently that we have become so largely industrial and 
that we still tend to retain our belief in the economic equality of all 
persons and their ability to bargain freely, effectively, and on equal 
terms, which is roughly the case in an era of domestic production or in 
an agricultural stage of society. Another cause is that our system of 
government with its delegated powers to the national government and 
all residual powers residing in the states, makes legislation far more 
difficult than in other countries with a stronger central government. 
It becomes exceedingly difficult to secure effective legislation by the 
forty-eight separate states, particularly under the fear of inter-state 
competition. 

1 Prepared. 


818 


PROTECTIVE LEGISLATION 


819 


Despite all these difficulties, however, the public mind has slowly 
come to believe that a certain regulation of work by the state is neces¬ 
sary to protect society itself from the evils which flow from an unregu¬ 
lated wage contract only in turn to find time and again that the courts 
have so interpreted the various constitutions of the states and national 
government to limit and nullify the legislation which the public 
has deemed desirable and necessary. Thus the 5 th and 14th amend¬ 
ments of the national Constitution prohibit the national and state 
government, respectively, from depriving a person of life, liberty, or 
property without due process of law, and the 14th amendment of the 
national Constitution provides that no state shall deprive any person 
within its jurisdiction of the equal protection of the laws. 

Intended as these constitutional provisions were to be safe¬ 
guards against unfair and arbitrary action on the part of legislatures, it 
is an open question whether they have not resulted in many cases in 
tying the community effectively to the prevailing practices of the past 
and hindering innovation while a rapidly changing technology has 
produced constantly changing problems calling for social action. 

2. CHILD-LABOR LEGISLATION 

* V, 

a) EARLY FACTORY LEGISLATION AFFECTING CHILDREN 1 

The first modern factory law dealt with the hours of children in 
British cotton mills. Beginning about 1760 people ceased to spin 
and weave entirely by hand, but took up the manufacture of cloth by 
power-driven machinery in large factories. In this transformation, 
which lies at the foundation of all our modern industry, many pauper 
children were apprenticed to the owners of the cotton factories. 
Philanthropists soon noticed that these children were miserably 
treated, overworked, and given no chance for education. An act, 
passed by the English Parliament in 1802, among other provisions, 
limited their hours to twelve a day. Inadequate as this standard now 
seems, it marks the beginning of the long line of special laws limiting 
the hours during which young workers may be employed. 

The first such law in the United States was passed by Massa¬ 
chusetts in 1842, and established a ten-hour day for all children under 
twelve working in factories. Along with forbidding all work for wages 

1 Taken with permission from J. B. Andrews, Labor Problems and Labor Legisla¬ 
tion, pp. 46-50. (New York City: American Association for Labor Legislation, 

1919.) 


820 


THE WORKER IN MODERN ECONOMIC SOCIETY 


by children under a certain age, provisions restricting the hours of 
the youngest workers have been developed, until today there is general 
agreement that legislation, at the very least, besides keeping children 
under fourteen out of the factory and in the school-room, should pre¬ 
vent night work by all boys and girls under sixteen and limit their 
working hours to eight. Beginning with Illinois in 1903, this standard 
has been reached by about half the states, including the majority of 
those of industrial importance. Of the remaining states, about half 
have nine-hour laws for children and the rest allow a work-day of 
ten hours or more. In some of the southern cotton-mill states, how¬ 
ever, it is legal for children to work at night and eleven hours a day, 
and such poor laws as exist are reported not to be well enforced. 

[Other regulation of child labor .—It should not be thought from the 
foregoing that 14 years is the universal minimum age for child labor. 
Certain qualifications are to be noted: 

(a) Children in agriculture can be employed below this age. 
Children in the street trades were not affected by the federal law and 
only half of the states have legislation on this subject. The prevailing 
age set for these trades is 12 rather than 14 years. Certain other states 
have a higher general minimum than 14. Ohio, for example, has a 
15 year limit for boys and a 16 year limit for girls while Michigan has 
a general 15 year minimum. 

(b) In addition to the minimum age of 14 for entrance to factory 
work, many states place a minimum age of 16 for certain more danger¬ 
ous positions such as cleaning machinery, etc., and some states place 
a minimum of 18 for extra-hazardous employments such as work in 
mines, blast furnaces, etc. Certain other states have a minimum of 
18 or even 20 for night messenger service or other morally dangerous 
work. 

(c) A number of states require a definite minimum of education in 
addition to the age qualification before allowing children to work. 
About half of the states require the ability to read and write English. 
Nearly half require the completion of the eighth grade. 

(d) Within the past few years a series of continuation school acts 
have been passed by the states until at present 19 states require chil¬ 
dren from 14 to 16 and in some cases from 14 to 18 to attend school 
from 4 to 8 hours weekly. This time is to be deducted from their 
working time and is not in addition to it. 

(e) Practically all the states regulate the hours which children are 
legally allowed to work once they are employed. The majority of 


PROTECTIVE LEGISLATION 


821 


industrial states limit the hours to 8 per clay while other states have 
a 9 hour maximum and the remainder 10 hours or more. These 
limitations usually apply to all occupations except domestic service, 
agriculture, and frequently canneries.— Ed.] 

b) CHILD LABOR IN THE UNITED STATES 1 
How Many Children in the United States Are at Work? 

In the United States in January, 1920, over one million (1,060,858) 
children 10 to 15 years of age, inclusive, were reported by census 
enumerators as “ engaged in gainful occupations.” This number was 
approximately one-twelfth of the total number (12,502,582) of chil¬ 
dren of that age in the entire country. About two-thirds of them were 
boys and one-third girls. The number of child workers 10 to 13 years 
of age, inclusive, was 378,063. The census does not report the number 
of working children under 10 years of age, but it is known that such 
children are employed in large numbers in agriculture, and in smaller 
numbers in many other occupations such as street trading, domestic 
service, and industrial home work. 

In What Occupations Are Children Engaged? 

For working children under 14 (i.e., “ 10 to 13 years, inclusive”) 
the proportions in January, 1920, were roughly as follows: Farms: 
329,000, 87 per cent; Factories: 9,500, 2.5 per cent; Stores: 17,000, 
4.6 per cent; Clerical: 7,000, 1.8 per cent; Domestic service: 12,000, 
3.2 per cent. 

In What Sections of the Country Are the Largest Numbers of 

Children at Work? 

Child labor is confined to one section of the country. The propor¬ 
tion of employed children to the total child population 10 to 15 years 
of age, inclusive, ranged from 3 per cent in the three Pacific Coast States 
to 17 per cent in the East South Central States , comprising Kentucky, 
Tennessee, Alabama, and Mississippi. In Mississippi more than one- 
fourth of all the children 10 to 15 years of age were at work; in Ala¬ 
bama and in South Carolina, 24 per cent; in Georgia, 21 percent; and 
in Arkansas, 19 per cent. Of the New England States, Rhode Island 
had the largest proportion of employed children, 13 per cent. 

1 Adapted from U.S. Department of Labor, Children's Bureau (November, 1922), 
pp. 5-19. 


822 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Is the Number of Children at Work Decreasing? 

The 1920 Census reported only 8.5 per cent of all children 10 to 
15 years of age, inclusive, to be at work, as compared with 18.4 per cent 
in 1910. This is a decrease of 46.7 per cent for children under 16, 
and a decrease of 57.8 per cent for children under 14. However, most 
of this decrease is apparent rather than real. In the first place, most 
of it (84.5 per cent) is due to the reported decrease of the number of 
children engaged in farm work—which is directly explicable by the 
change of the Census date since 1910 from April 15, a busy season for 
farming, to January 1, the dullest possible season. In the second 
place, January, 1920, marked the beginning of a period of general 
industrial depression which has since ceased. And in the third place, 
in January, 1920, the Federal Child-labor Tax law was still in effect. 

c) FEDERAL CHILD-LABOR LAW OF I916 1 

[Note: The United States Child Labor Act in question prohibited, 
with a few exceptions, the shipment in foreign or interstate commerce 
of any products if within thirty days prior to their movement children 
under the age of fourteen (sixteen years in mining and quarrying) had 
been employed to work more than eight hours in any day or more than 
six days in any week, or after the hour of 7:00 p.m., or before the hour 
of 6:00 a.m. A test case was brought and on August 31, 1917, the 
act was declared unconstitutional.— Ed.] 

Mr. Justice Day: The power essential to the passage of this act, 
the Government contends, is found in the commerce clause of the 
Constitution which authorizes Congress to regulate commerce with 
foreign nations and among the States. 

The thing intended to be accomplished by this statute is the denial 
of the facilities of interstate commerce to those manufacturers in the 
States who employ children within the prohibited ages. The act in 
its effect does not regulate transportation among the States, but aims 
to standardize the ages at which children may be employed in mining 
and manufacturing within the States. The goods shipped are of 
themselves harmless. The act permits them to be freely shipped after 
30 days from the time of their removal from the factory. When 
offered for shipment, and before transportation begins, the labor of 
their production is over, and the mere fact that they were intended for 

1 Hammer vs. Dagenhart, et at., 247 U.S. 251. 


PROTECTIVE LEGISLATION 823 

interstate commerce transportation does not make their production 
subject to Federal control under the commerce power. 

Over interstate transportation or its incidents, the regulatory 
power of Congress is ample, but the production of articles, intended 
for interstate commerce, is a matter of local regulation. 

The grant of power to Coagress over the subject of interstate com¬ 
merce was to enable it to regulate such commerce, and not to give it 
authority to control the States in their exercise of the police power 
over local trade and manufacture. 

In interpreting the Constitution it must never be forgotten that 
the Nation is made up of States to which are entrusted the powers of 
local government. To sustain this statute would not be in our judg¬ 
ment a recognition of the lawful exertion of congressional authority 
over interstate commerce, but would sanction an invasion by the 
Federal power of the control of a matter purely local in its character, 
and over which no authority has been delegated to Congress in con¬ 
ferring the power to regulate commerce among the States. 

In our view the necessary effect of this act is, by means of a pro¬ 
hibition against the movement in interstate commerce of ordinary 
commercial commodities to regulate the hours of labor of children in 
factories and mines within the States, a purely State authority. Thus 
the act in a two-fold sense is repugnant to the Constitution. It not 
only transcends the authority delegated to Congress over commerce 
but also exerts a power as to a purely local matter to which the Federal 
authority does not extend. 

d) FEDERAL CHILD-LABOR LAW OF I919 1 

[Note: The substance of the law is given in the court’s opinion.— 
Ed.] 

Mr. Chief Justice Taft: This case presents the question of the 
constitutional validity of the Child Labor Tax Law. 

The law is attacked on the ground that it is a regulation of the 
employment of child labor in the states—an exclusively state function 
under the Federal Constitution and within the reservations of the 10th 
Amendment. It is defended on the ground that it is a mere excise 
tax, levied by the Congress of the United States under its broad power 
of taxation conferred by section 8, article 1, of the Federal Constitu¬ 
tion. Does this law impose a tax with only that incidental restraint 

1 Bailey v Drexel Furniture Company , 259 U.S. 20. 


824 


THE WORKER IN MODERN ECONOMIC SOCIETY 


and regulation which a tax must inevitably involve ? Or does it 
regulate by the use of the so-called tax as a penalty ? It provides a 
heavy exaction for a departure from a detailed and specified course of 
conduct in business. That course of business is that employers shall 
employ in mines and quarries, children of an age greater than sixteen 
years; in mills and factories, children of an age greater than fourteen 
years; and shall prevent children of less than sixteen years in mills and 
factories from working more than eight hours a day or six days in the 
week. If an employer departs from this prescribed course of business, 
he is to pay to the government one tenth of his entire net income in 
the business for a full year. The amount is not to be proportioned in 
any degree to the extent or frequency of the departures, but is to be 
paid by the employer in full measure whether he employs five hundred 
children for a year, or employs only one for a day. Moreover, if he 
does not know the child is within the named age limit, he is not to pay; 
that is to say, it is only where he knowingly departs from the pre¬ 
scribed course that payment is to be exacted. Scienters are associated 
with penalties, not with taxes. The employer’s factory is to be sub¬ 
ject to inspection at any time not only by the taxing officers of the 
Treasury, the Department normally charged with the collection of 
taxes, but also by the Secretary of Labor and his subordinates, whose 
normal function is the advancement and protection of the welfare of 
the workers. In the light of these features of the act, a court must be 
blind not to see that the so-called tax is imposed to stop the employ¬ 
ment of children within the age limits prescribed. Its prohibitionary 
and regulatory effect and purpose are palpable. 

It is the high duty and function of this court in cases regularly 
brought to its bar to decline to recognize or enforce seeming laws of 
Congress, dealing with subjects not intrusted to Congress, but left or 
committed by the supreme law of the land to the control of the states. 
We cannot avoid the duty even though it require us to refuse to give 
effect to legislation designed to promote the highest good. The good 
sought in unconstitutional legislation is an insidious feature because 
it leads citizens and legislators of good purpose to promote it without 
thought of the serious breach it will make in the ark of our covenant, 
or the harm which will come from breaking down recognized standards. 

In connection with Selection 3 following, see also chapter x, Part 
Three, “Women’s Work and Wages.” 



PROTECTIVE LEGISLATION 


825 


3. PROTECTION OF WOMEN IN INDUSTRY 

a) CLASSIFICATION OF PROTECTIVE LAWS 1 

Factory legislation, as first conceived, was to apply only to those 
who were not free agents, namely to children. True, the married 
woman was not legally a free agent, but she was struggling for emanci¬ 
pation, which eventually came, and the female sex as such labored 
under no disabilities. Prominent economists urged that the state had 
no business to dictate to the adult woman the terms of her employ¬ 
ment. But the exclusion of woman from underground mines paved 
the way for her subjection to state control, and the act of 1844 put 
her in the same class with children and young persons. The separate 
and distinct treatment of women thus became an established feature 
of English factory legislation. 

A brief survey of the American legislation for the protection of 
women in industry reveals the following types of statutes: 

1. Those which provide that no person shall be precluded from any 
lawful occupation on account of sex. A statute of this kind can at 
most have the effect of removing some supposed bar existing by virtue 
of law custom. The statute of Illinois was in fact the consequence of a 
decision of the supreme court of that state which denied a woman a 
license to practise law, and against which the Supreme Court of the 
United States has been appealed to in vain. The incorporation of the 
principle into the constitution may, on the other hand, prove an 
embarrassment in the way of carrying out other protective policies. 

2. Those which bar women from certain employments altogether. 
It is noteworthy that only five days after removing the disabilities of 
sex with reference to employment in general, Illinois prohibited the 
labor of women in coal mines and the same prohibition is now found 
in the principal mining states (Wyoming). 

3. Statutes which prohibit the employment of women in cleaning 
machinery while in motion, or in work between moving parts of 
machinery, is found in Missouri and West Virginia. 

4. Statutes which compel the provision of sanitary and other con¬ 
veniences for females in industrial or mercantile establishments. 
Beside certain obvious requirements in the interest of decency, par- 

1 Adapted with permission from Ernst Freund, “The Constitutional Aspect 
of the Protection of Women in Industry,” Proceedings of the Academy of Political 
Science (October, 1910), pp. 162-75. 


826 


THE WORKER IN MODERN ECONOMIC SOCIETY 


ticular mention should be made of the legislation found in the great 
majority of states, under which seats must be provided for female 
employes and their use permitted when the women are not engaged 
in active duty. 

5. Statutes which prohibit night work in various kinds of industrial 
establishments. They are to be found in about a half dozen states 
(New York,Connecticut, Indiana, Massachusetts,Missouri, Nebraska). 

6. Statutes which in other respects limit the hours of labor of 
female employees. 

7. Minimum wage laws. 

b) HOUR LEGISLATION FOR WOMEN 
i. The Progress of Hour Legislation 1 

At the present time 42 of the 48 states place some restriction upon 
the number of hours per week which a woman can legally work. Many 
of these have placed limits of from eight to nine hours a day while the 
majority have a weekly limit of less than sixty hours. Night work 
however is forbidden to women by only 12 states. The legal issues 
that have arisen in connection with the passage of such laws by the 
state legislatures are somewhat as follows: (a) Does not such a law 
abridge the right of a working-woman to work longer hours than those 
allowed should she wish to do so ? Is it not therefore a deprivation 
of the right of disposing of her own labor without “due process of 
law” ? ( b ) Is it not class legislation since it denies her opportunities 

extended to male employees ? ( c ) Is this offset by the damage done 

to the women and to society if they should work extra hours ? If so, 
such an act can be justified as a legitimate use of the police power of 
the state. 

The most important cases which illustrate the clash of these 
divergent principles are: 

1. The Massachusetts Ten Hour Law of 1875: The Massachusetts 
Supreme Court upheld this law in 1876 stating briefly that the legisla¬ 
ture had regarded factory work as “somewhat” dangerous to health 
and therefore the act was justified under the police power. 

2. The Illinois Eight Hour Law of 1895: In the twenty years 
intervening between 1875 and 1895 the doctrine of the complete free¬ 
dom of contract between labor and capital had been developed by the 
courts as well as the belief that the right to dispose of one’s labor was 
a property right which according to the fourteenth amendment was 

1 Prepared. 


PROTECTIVE LEGISLATION 


827 


not to be abridged without “due process of law.” The Illinois 
Supreme Court in 1895 (.Ritchie vs. People ), following this line of 
reasoning, declared the eight hour law for women in factories to be 
unconstitutional. The court ruled that there was “no fair, just and 
reasonable connection between such limitation and the public health, 
safety, and welfare proposed to be secured by it.” 

3. The Oregon Ten Hour Law: In 1908 the United States Supreme 
Court upheld the constitutionality of the Oregon ten hour law for 
women declaring that: “As healthy mothers are essential to vigorous 
offspring, the physical well-being of women becomes an object of 
public interest and care in order to preserve the strength and vigor of 

the race.The limitations which this statute imposes upon her 

contractual powers, upon her right to agree with her employer as to 
the time when she shall labor are not imposed solely for her benefit 
but also for the benefit of all.” A feature of the case was the brief 
prepared in defense of the legislation by Mr. Louis Brandeis and Miss 
Josephine Goldmark which emphasized not so much the legal aspects 
of the case but presented a mass of scientific evidence showing the 
actual effects of excessive working hours upon the health of women. 
This brief was epoch making in its emphasis upon facts as a basis for 
correct determination of legal and social policy. 

4. The Illinois Ten Hour Act of 1909: In 1909 Illinois passed 
another act limiting the hours of women’s labor, this time to ten hours, 
and the Illinois Supreme Court reversed its decision and found there 
was a clear connection between the regulation of hours of labor and 
public health. “What we know as men, we cannot profess to be 
ignorant of as judges,” declared the court. 

5. The California Eight Hour Law Case: The two preceding de¬ 
cisions established the constitutionality of the ten hour day for women. 
It remained for the United States Supreme Court in 1915 to establish 
the constitutionality of the eight hour day when it upheld the Cali¬ 
fornia Act. The court said the same principles were involved as in 
the previous cases and declared that while “a limitation of the hours 
of women might be pushed to a wholly indefensible extreme, there 
is no ground for the conclusion that the limit of the reasonable exertion 
of protective authority has been overstepped.” 

6. Night Work Case: Although an International Conference had 
drafted a convention in 1906 by which fourteen European countries 
agreed to abolish night work in 1907, the New York Court of Appeals 
declared such an act unconstitutional as an invasion of the right of 



828 


THE WORKER IN MODERN ECONOMIC SOCIETY 


free contract, and as unconnected with the promotion of health. This 
decision has made legislatures reluctant to pass night work laws 
although the New York Court unanimously reversed its attitude in 
1913 as a result of another scientific brief presented by Mr. Brandeis 
in defense of the new night work law.' The question of night work has 
not yet been passed on by the United States Supreme Court. 

ii, The Status and the Collective Bargaining Arguments for Hour 

Legislation 1 

In America the sanitary or hygienic argument in the movement for 
limitation of hours of female labor in factories was prominent from the 
beginning. The legislation in Massachusetts enacted in 1874 had 
been preceded by official investigations and reports concerning the 
detrimental effect of long hours upon the constitution of women. 

In the earlier judicial decisions sustaining the ten-hour laws for 
women the existence of this special danger and need was rather 
assumed than supported by evidence. The argument for the Oregon 
law before the Supreme Court of the United States for the first time 
laid all stress .... upon the documentary testimony which had 
been accumulated in scientific treatises .... marshalling medical, 
social and economic, instead of legal authorities. 

In upholding the Oregon io-hour law, however, the Supreme Court 
of the United States, instead of planting its decision squarely upon the 
facts presented in the brief for the state of Oregon, mingles considera¬ 
tions drawn from physical conditions with others resting upon the 
general status of the female sex in such a way as to give an apparent 
preponderance to the latter. The court, speaking through Mr. 
Justice Brewer, said: 

“Still, again,history discloses the fact the woman has always been 
dependent upon man. He established his control at the outset by 
superior physical strength, and his control in various forms, with 
diminishing intensity, has continued to the present. As minors, 
though not to the same extent, she has been looked upon in the courts 
as needing especial care that her rights may be preserved. The two 
sexes differ in structure of body, in the capacity for long-continued 
labor, particularly when done standing, the influence of vigorous 
health upon the future well-being of the race, the self-reliance which 
enables one to assert full rights, and in the capacity to maintain the 

1 Adapted with permission from Ernst Freund, “The Constitutional Aspects of 
the Protection of Women in Industry,” Proceedings of the Academy of Political 
Science (October, 1910), pp. 162-75. 



PROTECTIVE LEGISLATION 


829 


s truggle for subsistence. This difference justifies a difference in legisla¬ 
tion and upholds that which is designed to compensate for some of 
the burdens which rest upon her.” 

There is another argument in favor of a larger state interference 
with the freedom of contract in the case of women than in that of men, 
which has received little attention, but seems to deserve consideration. 

The whole doctrine of freedom of contract is based upon a theory 
of constitutional equality which is frequently belied by the facts. 
What saves the theory from being altogether a fiction, is the possibility 
of contracting on something like equal terms through the power of 
collective bargaining. The doctrine of freedom of contract stands and 
falls with the efficacy of the organization of labor . If for any reason, 
such organization is impossible or ineffective, the right of the state 
to exert its power cannot in reason be disputed. 

In the past, women workers have been greatly inferior to men in 
the power of effective organization. It remains to be seen whether 
this inferiority will be permanent. Considering the fact that most 
women enter industrial work as a temporary occupation which they 
expect to give up for matrimony, and that the care of the household 
and family is still regarded as their normal and proper function, it is 
not surprising that there should be much less opportunity and induce¬ 
ment for organization among women than among men. And if this 
should prove to be a necessary limitation, it would constitute a justi¬ 
fication for the exercise of state control, which in the case of men may 
be found to be absent or to be confined to particular employments. 

4. HOUR LEGISLATION FOR MEN 

a) LOCHNER V. NEW YORK 1 

[Note: A New York statute forbade any employee in a bakery or 
confectionery establishment to be permitted to work over 60 hours in 
any one week, or an average of over 10 hours a day for the number of 
days such employees should work. Lochner was convicted in the 
county court of violating this statute in the city of Utica, and the 
conviction was affirmed on appeal by the Appellate Division and by 
the Court of Appeals of the state, which remanded the case to the 
original court for further proceedings.— Ed.] 

The question whether this act is valid as a labor law, pure and 
simple, may be dismissed in a few words. There is no reasonable 
ground for interfering with the liberty of person or the right of free 

1 Supreme Court of United States, 1905. 198 U.S. 45, 25 Sup. Ct. 539. 


830 


THE WORKER IN MODERN ECONOMIC SOCIETY 


contract, by determining the hours of labor, in the occupation of a 
baker. There is no contention that bakers as a class are not equal in 
intelligence and capacity to men in other trades or manual occupations, 
or that they are not able to assert their rights and care for themselves 
without the protecting arm of the state, interfering with their inde¬ 
pendence of judgment and of action. They are in no sense wards of 
the state. The law must be upheld, if at all, as a law pertaining to 
the health of the individual engaged in the occupation of a baker. 
It does not affect any other portion of the public than those who are 
engaged in that occupation. Clean and wholesome bread does not 
depend upon whether the baker works but ten hours per day or only 
sixty hours a week. 

We think the limit of the police power has been reached and 
passed in this case. There is, in our judgment, no reasonable foun¬ 
dation for holding this to be necessary or appropriate as a health law 
to safeguard the public health, or the health of the individuals who are 
following the trade of a baker. If this statute be valid there would 
seem to be no length to which legislation of this nature might not go. 

We think that there can be no fair doubt that the trade of a baker, 
in and of itself, is not an unhealthy one to that degree which would 
authorize the legislature to interfere with the right of labor, and the 
right of free contract. In looking through statistics regarding all 
trades and occupations, it may be true that the trade of a baker does 
not appear to be as healthy as some other trades, and is also vastly 
more healthy than still others. To the common understanding the 
trade of a baker has never been regarded as an unhealthy one. Very 
likely physicians would not recommend the exercise of that or of any 
other trade as a remedy for ill health. Some occupations are more 
healthy than others, but we think there are none which might not 
come under the power of the legislature to supervise and control the 
hours of working therein, if the mere fact that the occupation is not 
absolutely and perfectly healthy is to confer the right upon the legisla¬ 
tive department of the government. It might be safely affirmed that 
almost all occupations more or less affect the health. There must be 
more than the mere fact of the possible existence of some small amount 
of unhealthiness to warrant legislative interference with liberty. It 
is unfortunately true that labor, even in any department, may possibly 
carry with it the seeds of unhealthiness. But are we all, on that 
account, at the mercy of legislative majorities ? A printer, a tinsmith, 
a locksmith, a carpenter, a cabinetmaker, a dry goods clerk, a bank’s, 


PROTECTIVE LEGISLATION 


83 1 


a lawyer’s, or a physician’s clerk, or a clerk in almost any kind of 
business, would all come under the power of the legislature, on this 
assumption. No trade, no occupation, no mode of earning one’s 
living, could escape this all-pervading power, and the acts of the legis¬ 
lature in limiting the hours of labor in all employment would be valid, 
although such limitation might seriously cripple the ability of the 
laborer to support himself and his family. 

In our large cities there are many buildings into which the sun 
penetrates for but a short time each day, and these buildings are 
occupied by people carrying on the business of bankers, brokers, 
lawyers, real estate, and many other kinds of business, aided by many 
clerks, messengers, and other employees. Upon the assumption of 
the validity of this act under review, it is not possible to say that an 
act, prohibiting lawyers’ or bank clerks, or others, from contracting to 
labor for their employers more than eight hours a day would be 
invalid. It might be said that it is unhealthy to work more than that 
number of hours in an apartment lighted by artificial light during the 
working hours of the day; that the occupation of the bank clerk, the 
lawyer’s clerk, the real-estate clerk, or the broker’s clerk, in such 
offices is therefore unhealthy and the legislature, in its paternal wisdom, 
must, therefore, have the right to legislate on the subject of, and to 
limit, the hours for such labor; and, if it exercises that power, and its 
validity be questioned, it is sufficient to say, it has reference to the 
public health; it has reference to the health of the employees con¬ 
demned to labor day after day in buildings where the sun never shines; 
it is a health law, and therefore it is valid, and cannot be questioned 
by the courts. 

It is also urged, pursuing the same line of argument, that it is to 
the interest of the state that its population should be strong and 
robust, and therefore any legislation which may be said to tend to make 
people healthy must be valid as health laws, enacted under the police 
power. If this be a valid argument and a justification for this kind 
of legislation, it follows that the protection of the federal constitution 
from undue interference with liberty of person and freedom of con¬ 
tract is visionary, wherever the law is sought to be justified as a valid 
exercise of the police power. Scarcely any law but might find shelter 
under such assumptions, and conduct, properly so called, as well as 
contract, would come under the restrictive sway of the legislature. 
Not only the hours of employees, but the hours of employers, could 
be regulated, and doctors, lawyers, scientists, all professional men, as 


832 THE WORKER IN MODERN ECONOMIC SOCIETY 

well as athletes and artisans, could be forbidden to fatigue their brains 
and bodies by prolonged hours of exercise, lest the fighting strength of 
the state be impaired. We mention these extreme cases because the 
contention is extreme. 

We do not believe in the soundness of the views which uphold this 
law. On the contrary, we think that such a law as this, although 
passed in the assumed exercise of the police power, and as relating to 
the public health, or the health of the employees named, is not within 
that power, and is invalid. The act is not, within any fair meaning 
of the term, a health law, but is an illegal interference with the rights of 
individuals, both employers and employees, to make contracts regard¬ 
ing labor upon such terms as they may think best, or which they may 
agree upon with the other parties to such contracts. Statutes of the 
nature of that under review, limiting the hours in which grown and 
intelligent men may labor to earn their living, are mere meddlesome 
interferences with the rights of the individual and they are not saved 
from condemnation by the claim that they are passed in the exercise 
of the police power and upon the subject of the health of the individual 
whose rights are interfered with, unless there be some fair ground, 
reasonable in and of itself, to say that there is material danger to the 
public health, or to the health of the employees, if the hours of labor 
are not curtailed. 

It was further urged on the argument that restricting the hours of 
labor in the case of bakers was valid because it tended to cleanliness 
on the part of the workers, as a man was more apt to be cleanly when 
not overworked, and if cleanly then his “output” was also more likely 
to be so. The connection, if any exist, is too shadowy and thin 
to build any argument for the interference of the legislature. If the 
man works ten hours a day it is all right, but if ten and a half or eleven 
his health is in danger and his bread may be unhealthful, and, there¬ 
fore, he shall not be permitted to do it. This, we think, is unreason¬ 
able and entirely arbitrary.It seems to us that the real object 

and purpose were simply to regulate the hours of labor between the 
master and his employees (all being men, sui juris), in a private busi¬ 
ness, not dangerous in any degree to morals, or in any real and sub¬ 
stantial degree to the health of the employees. Under such cir¬ 
cumstances the freedom of master and employee to contract with 
each other in relation to their employment, and in defining the same, 
cannot be prohibited or interfered with, without violating the federal 
Constitution. 

Judgment reversed. 



PROTECTIVE LEGISLATION 


833 


Mr. Justice Harlan (with whom concurred White and Day, JJ.), 
dissenting: I find it impossible, in view of common experience, to say 
that there is here no real or substantial relation between the means 
employed by the state and the end sought to be accomplished by its 
legislation. 

We judicially know that the question of the number of hours during 
which a workman should continuously labor has been, for a long 
period, and is yet, a subject of serious consideration among civilized 
peoples, and by those having special knowledge of the laws of health. 
Suppose the statute prohibited labor in bakery and confectionery 
establishments in excess of eighteen hours each day. No one, I take 
it, could dispute the power of the state to enact such a statute. But 
the statute before us does not embrace extreme or exceptional cases. 
It may be said to occupy a middle ground in respect of the hours of 
labor. What is the true ground for the state to take between legiti¬ 
mate protection, by legislation, of the public health and liberty of 
contract is not a question easily solved, nor one in respect of which 
there is or can be absolute certainty. There are very few, if any, 
questions in political economy about which entire certainty may be 
predicted. 

I do not stop to consider whether any particular view of this eco¬ 
nomic question presents the sounder theory. What the precise facts 
are it may be difficult to say. It is enough for the determination of this 
case, and it is enough for this court to know, that the question is one 
about which there is room for debate and for an honest difference of 
opinion. There are many reasons of a weighty, substantial char¬ 
acter, based upon the experience of mankind, in support of the theory 
that, all things considered, more than ten hours’ steady work each day, 
from week to week, in bakery or confectionery establishment, may 
endanger the health and shorten the lives of the workmen, thereby 
diminishing their physical and mental capacity to serve the state and 
to provide for those dependent upon them. 

If such reasons exist, that ought to be the end of this case, for 
the state is not amenable to the judiciary, in respect of its legislative 
enactments, unless such enactments are plainly, palpably, beyond 
all question, inconsistent with the Constitution of the United 
States. 

Mr. Justice Holmes, dissenting: This case is decided upon an 
economic theory which a large part of the country does not entertain. 
If it were a question whether I agreed with that theory, I should desire 
to study it further and long before making up my mind. But I do 


834 THE WORKER IN MODERN ECONOMIC SOCIETY 

not conceive that to be my duty, because I strongly believe that my 
agreement or disagreement has nothing to do with the right of a major¬ 
ity to embody their opinions in law. It is settled by various decisions 
of this court that state Constitutions and state laws may regulate life 
in many ways which we as legislators might think as injudicious, or if 
you like as tyrannical, as this, and which, equally with this, interfere 
with the liberty to contract. Sunday laws and usury laws are ancient 
examples. A more modern one is the prohibition of lotteries. The 
liberty of the citizen to do as he likes so long as he does not interfere 
with the liberty of others to do the same, which has been a shibboleth 
for some well-known writers, is interfered with by school laws, by 
the post-office, by every state of municipal institution which takes his 
money for purposes thought desirable, whether he likes it or not. 

The fourteenth amendment does not enact Mr. Herbert Spen¬ 
cer’s Social Statics. The other day we sustained the Massachusetts 
vaccination law, and state statutes and decisions cutting down the 
liberty to contract by way of combination are familiar to this court. 
Two years ago we upheld the prohibition of sales of stock on margins, 
or for future delivery, in the Constitution of California. The decision 
sustaining an eight-hour law for miners is still recent (.Holden v. 
Hardy). Some of these laws embody convictions or prejudices which 
judges are likely to share. Some may not. But a constitution is not 
intended to embody a particular economic theory, whether of paternal¬ 
ism and the organic relation of the citizen to the state or of laissez 
faire. It is made for people of fundamentally differing views, and the 
accident of our finding certain opinions natural and familiar, or novel, 
and even shocking, ought not to conclude our judgment upon the ques¬ 
tion whether statutes embodying them conflict with the Constitution 
of the United States. 

General propositions do not decide concrete cases. The decision 
will depend on a judgment or intuition more subtle than any articulate 
major premise. But I think that the proposition just stated, if it is 
accepted, will carry us far toward the end. Every opinion tends to 
become a law. I think that the word “liberty,” in the fourteenth 
amendment, is perverted when it is held to prevent the natural out¬ 
come of a dominant opinion, unless it can be said that a rational and 
fair man necessarily would admit that the statute proposed would 
infringe fundamental principles as they have been understood by the 
traditions of our people and our law. It does not need research to 
show that no such sweeping condemnation can be passed upon the 


PROTECTIVE LEGISLATION 


835 


statute before us. A reasonable man might think it a proper measure 
on the score of health. Men whom I certainly could not pronounce 
unreasonable would uphold it as a first installment of a general regula¬ 
tion of the hours of work. Whether in the latter aspect it would be 
open to the charge of inequality I think it unnecessary to discuss. 

b) HOLDEN V. HARDY 1 

[Note: A Utah statute forbade the employment of workmen over 
eight hours a day in any underground mine, or in any smelter or other 
institution for reducing or refining ores, except in cases of emergency 
imminently dangerous to life or property. Holden was convicted in a 
justice’s court in Salt Lake County of violating both prohibitions of this 
statute, and petitioned the state Supreme Court for a writ of habeas 
corpus to discharge him from the sheriff’s custody upon each convic¬ 
tion. From a denial of this application he took his writ of error to the 
Supreme Court of Utah.'— Ed.] 

In passing upon the validity of state legislation under the fourteenth 
amendment, this court has not failed to recognize the fact that the law 
is, to a certain extent, a progressive science; that, in some of the states, 
methods of procedure which, at the time the constitution was adopted, 
were deemed essential to safety have been found to be no longer neces¬ 
sary; that restrictions which had formerly been laid upon the con¬ 
duct of individuals, or of classes of individuals, had proved detrimental 
to their interests, while, upon the other hand, certain other classes 
of persons (particularly those engaged in dangerous or unhealthful 
employments) have been found to be in need of additional protection. 

Of course, it is impossible to forecast the character or extent of 
these changes; but in view of the fact that, from the day Magna 
Charta was signed to the present moment, amendments to the structure 
of the law have been made with increasing frequency, it is impossible 
to suppose that they will not continue, and the law be forced to adapt 
itself to new conditions of society and particularly to the new relations 
between employers and employes, as they arise. 

Recognizing the difficulty in defining with exactness the phrase 
“due process of law,” it is certain that these words imply a conformity 
with natural and inherent principles of justice, and forbid that one 
man’s property, or right to property, shall be taken for the benefit of 
another, or for the benefit of the state, without compensation, and 

1 Supreme Court of United States, 1898. 169 U.S. 366, 18 Sup. Ct. 383, 

42 L. Ed. 780. 


836 THE WORKER IN MODERN ECONOMIC SOCIETY 

that no one shall be condemned in his person or property without an 
opportunity of being heard in his own defense. 

This right of contract, however, is itself subject to certain limita¬ 
tions which the state may lawfully impose in the exercise of its police 
powers. While this power is inherent in all governments, it has doubt¬ 
less been greatly expanded in its application during the past century, 
owing to an enormous increase in the number of occupations which 
are dangerous or so far detrimental to the health of employes as to 
demand special precautions for their well being and protection, or 
the safety of adjacent property. While this court has held that the 
police power cannot be put forward as an excuse for oppressive and 
unjust legislation, it may be lawfully resorted to for the purpose of 
preserving the public health, safety, or morals, or the abatement of 
public nuisances, and a large discretion “is necessarily vested in the 
legislature, to determine, not only what the interests of the public 
require, but what measures are necessary for the protection of such 
interests.” 

While the business of mining coal and manufacturing iron began 
in Pennsylvania as early as 1716, and in Virginia, North Carolina, and 
Massachusetts even earlier than this, both mining and manufacturing 
were carried on in such a limited way, and by such primitive methods, 
that no special laws were considered necessary, prior to the adoption 
of the constitution, for the protection of the operatives; but, in the 
vast proportions which these industries have since assumed, it has been 
found that they can no longer be carried on, with due regard to the 
safety and health of those engaged in them, without special protection 
against the dangers necessarily incident to these employments. In 
consequence of this, laws have been enacted in most of the states 
designed to meet these exigencies, and to secure the safety of persons 
peculiarly exposed to these dangers. Within this general category are 
ordinances providing for fire escapes for hotels, theaters, factories, and 
other large buildings; a municipal inspection of boilers; and appliances 
designed to secure passengers upon railways and steamboats against 
the dangers necessarily incident to these methods of transportation. 
In states where manufacturing is carried on to a large extent, provision 
is made for the protection of dangerous machinery against accidental 
contact; for the cleanliness and ventilation of working rooms; for the 
guarding of well holes, stairways, elevator shafts; and for the employ¬ 
ment of sanitary appliances. In others, where mining is the principal 
industry, special provision is made for the shore up of dangerous walls; 


PROTECTIVE LEGISLATION 


S 3 7 


for ventilation shafts, bore holes, escapement shafts, means of signal¬ 
ing the surface; for the supply of fresh air, and the elimination, as far 
as possible, of dangerous gases; for safe means of hoisting and lowering 
cages; for a limitation upon the number of persons permitted to enter 
a cage; that cages shall be covered; and that there shall be fences and 
gates around the top of shafts, besides other similar precautions. 

But, if it be within the power of a legislature to adopt such means 
for the protection of the lives of its citizens, it is difficult to see why 
precaution may not also be adopted for the protection of their health 
and morals. It is as much for the interest of the state that the public 
health should be preserved as that life should be made secure. With 
this end in view, quarantine laws have been enacted in most, if not all, 
of the states; insane asylums, public hospitals, and institutions for the 
care and education of the blind have been established; and special 
measures taken for the exclusion of infected cattle, rags, and decayed 
fruit. In other states laws have been enacted limiting the hours 
during which women and children shall be employed in factories. 

Upon the principles above stated, we think the act in question 
may be sustained as a valid exercise of the police power of the state. 
The enactment does not profess to limit the hours of all workmen, but 
merely those who are employed in underground mines, or in the smelt¬ 
ing, reduction, or refining of ores or metals. These employments, 
when too long pursued, the legislature has judged to be detrimental to 
the health of the employes; and so long as there are reasonable grounds 
for believing that this is so, its decision upon this subject cannot be 
reviewed by the federal courts. 

While the general experience of. mankind may justify us in believ¬ 
ing that men may engage in ordinary employments more than eight 
hours per day without injury to their health, it does not follow that 
labor for the same length of time is innocuous when carried on beneath 
the surface of the earth, where the operative is deprived of fresh air 
and sunlight, and is frequently subjected to foul atmosphere and a 
very high temperature, or to the influence of noxious gases generated 
by the processes of refining or smelting. 

The legislature has also recognized the fact, which the experience 
of legislators in many states has corroborated, that the proprietors 
of these establishments and their operatives do not stand upon an 
equality, and that their interests are, to a certain extent, conflicting. 
The former naturally desire to obtain as much labor as possible from 
their employes, while the latter are often induced by the fear of dis- 


838 THE WORKER IN MODERN ECONOMIC SOCIETY 


charge to conform to regulation which their judgment, fairly exercised, 
would pronounce to be detrimental to their health or strength. In 
other words, the proprietors lay down the rules and the laborers are 
practically constrained to obey them. In such cases self-interest is 
often an unsafe guide, and the legislature may properly interpose its 
authority. 

Judgment affirmed. 

5. A CASE FOR GENERAL HOUR LEGISLATION 

a) THE OREGON TEN-HOUR CASE, DEPENDANT’S BRIEF 1 

Statute :—The pertinent provisions of the statute in question are 
as follows: 

“Section i.-—It is the public policy of the State of Oregon that no 
person shall be hired, nor permitted to work for wages, under any 
conditions or terms for longer hours or days of service than is consistent 
with his health and physical well-being and ability to promote the 
general welfare by his increasing usefulness as a healthy and intelligent 
citizen. It is hereby declared that the working of any person more 
than ten hours in one day, in any mill, factory, or manufacturing 
establishment is injurious to the physical health and well-being of 
such persons, and tends to prevent him from acquiring that degree 
of intelligence that is necessary to make him a useful and desirable 
citizen of the State. 

“Section 2 :—No person shall be employed in any mill, factory or 
manufacturing establishment in this State more than ten hours in any 
one day, except watchmen and employees when engaged in making 
necessary repairs, or in case of emergency, where life or property is in 
imminent danger; provided, however, employees may work overtime 
not to exceed three hours in any one day, conditioned that payment be 
made for said overtime at the rate of time and one-half the regular 
wage.” (General Laws of Oregon, 1913, chap. 102, p. 169.) 

The Issue :—The sole question presented is whether this Oregon 
ten hour law is unconstitutional because in conflict with the Fourteenth 
Amendment. 

Argument .—The issue presents the familiar case of application and 
delimitation of accepted principles. The assertion by a state of its 
police power is challenged by the claim of “liberty” as safeguarded by 
the Fourteenth Amendment. 

1 Adapted from “The Case for the Shorter Work Day” Supreme Court'of the 
United States, October Term, 1915; the Oregon ten-hour law was later upheld. 


PROTECTIVE LEGISLATION 


839 


Now therefore the field within which the police power may be 
exercised must be ascertained by specific cases, and not bounded by 
speculation. 

The question is no longer can the state regulate the hours of labor 
in modern industry, but what evils are manifest, what remedies are 
available that present a reasonable field for legislative action. 

Thus in Holden v. Hardy it is stated: “The question in each case 
is whether the legislature has adopted the statute in exercise of a 
reasonable discretion, or whether its action be mere excuse for an 
unjust discrimination, or the expression, or spoliation of a particular 
class.” 

On the other hand, in Lochner v. New York, the state authority in 
the specific instance was denied because no reasonable relation was 
discernible to the majority of the court between a ten hour law for 
bakers and the public welfare. This judgment was based upon a 
view of the nature of the baker’s employment beyond ten hours as 
known “to the common understanding.” It is now clear that “com¬ 
mon understanding” is a treacherous criterion. The subject is one 
for scientific scrutiny and critique. Particularly in the last decade 
science has been giving us the basis for judgment by experience, to 
which, when furnished, judgment by speculation must yield. 

It is to this body of experience that the court’s attention is invited. 
It is a mass of data that, partly, was not presented in cases like Lochner 
v. New York, but mostly could not have been before the Court, because 
it was not heretofore in existence. Inasmuch as the application of the 
contending principles must vary with the facts to which they are 
sought to be applied, of course, new facts are the indispensable basis 
to the determination of the validity of specific new legislation. This 
attitude was strikingly enforced by the New York Court of Appeals, 
when called upon recently to pass on the validity of legislation which 
it had previously, for lack of adequate data, failed to sustain. “There 
is no reason why we should be reluctant to give effect to new and addi¬ 
tional knowledge upon such a subject as this even if it did lead us to 
take a different view of such a vastly important question as that of 
public health or disease than formerly prevailed.” (. People v. Charles 
Schweinler Press. 214 N.Y. 395, 412.) 

The knowledge obtained by the increasing study of industrial con¬ 
ditions is back of the state’s policy, as expressed by the legislature, and 
sustained by the courts of Oregon. These are facts of common 
knowledge of which this Court will take judicial note. 


840 


THE WORKER IN MODERN ECONOMIC SOCIETY 


These facts, we submit, conclusively establish that Oregon was 
exercising a reasonable judgment as to the public welfare in passing 
its ten hour law. 

b) BASIS FOR GENERAL HOUR LEGISLATION 1 

The following propositions suggest themselves as a possible basis 
for legislation limiting hours of labor for adult employees where there 
are neither urgent considerations of health nor any danger to public 
safety as a consequence of decreased efficiency due to excessive fatigue: 

(1) We should not claim, in view of recognized limitations and in 
view of the universal practice of legislation in other countries as well as 
in this, any unlimited power of the state to dictate hours of labor any 
more than to dictate the rate of wages or other economic terms of the 
labor contract. 

(2) Under present conditions even an eight-hour day established 
by law would probably constitute an unwarranted invasion of the 
constitutional liberty of private action, and since such a proposition 
is for the time being not seriously put forward by any one it need not 
be further considered. 

(3) On the other hand, a law establishing one day of rest in seven 
would find a perfect warrant in our present Sunday laws, the validity 
of which is recognized everywhere, for such a law would merely carry 
into effect the policy of Sunday legislation, and Sunday legislation 
differs from eight-hour legislation in that it merely protects and 
enforces customary standards, and does not invade recognized canons 
of freedom but conserves them. 

(4) In order to justify a legislative limitation of the work day it 
should be possible to find a basis similar in principle to that underlying 
the existing limitation of the working week. As a matter of fact such 
limitation can be found in the statistics furnished by the United States 
government. As early as ten years ago they demonstrated the fact 
that a nation-wide custom had established a normal maximum work 
day in industry and that maximum was ten hours. The branches of 
industry in which that maximum is exceeded are relatively few and 
they suggest conditions which must, in some way or other, be either 
wrong or exceptional. The basis of constitutional legislation is thus 
clearly indicated. Like the one day rest in seven, the ten-hour day 
would not impose new standards but would enforce and protect 
customary standards. 

1 Taken with permission from Ernst Freund, “Constitutional Aspects of Hour 
Legislation for Men/’ American Labor Legislation Review, March, 1914, pp. 129-31. 


PROTECTIVE LEGISLATION 


841 


(5) Like the one day of rest in seven a ten-hour law could be made 
general, thus steering clear of the danger of class legislation. The 
necessities of life and business, however, would call for relaxations of 
the general requirement in proper cases, in one law as well as in the 
other. The exceptions from the Sunday law have been expressed in 
such indefinite terms—works of charity and necessity—that the effec¬ 
tive administration of the law has been seriously impaired and the 
problem of discovering a satisfactory and impartial formula for excep¬ 
tions is the chief difficulty in the present one day of rest in seven 
movement. Similar difficulties will have to be confronted in providing 
for the exceptions to the ten-hour day. 

(6) The necessary exceptions from the maximum of ten hours will 
probably have to be established in two ways: first, by excluding certain 
categories of employment entirely and, second, by making exceptions 
for other special classes of industry dependent upon findings of fact 
and administrative orders subject to judicial review. While the 
statute should indicate the guiding principles to be observed in grant¬ 
ing exceptions, it should admit of flexible rulings, the main purpose of 
which would be to provide for the gradual introduction of the normal 
day, where the same, under present industrial conditions, is im¬ 
practicable. 

(7) The plan of legislation thus outlined is probably the safest 
from the point of view of present constitutional doctrine and of the 
probable attitude of the courts, for the freedom of private action would 
not be unduly interfered with by the impositions of new standards. 
The principle of selection would be divested of any arbitrariness and 
there would be every practicable guaranty of bringing about sub¬ 
stantial justice in the relations between employer and employee. 
Even though a perfect solution might not be found immediately for 
every conceivable case the plan would be sufficiently flexible to allow 
revision of the conclusions until a satisfactory result was reached. A 
law of this type would not make impossible demands upon legislative 
foresight and circumspection, while, on the other hand, action would 
not be stayed off indefinitely upon the plea of the impossibility of 
finding an adequate solution for every difficulty at one and the same 
time. While it is true that such legislation would require a somewhat 
higher type of administrative organization than most states have as 
yet developed for dealing with labor problems, yet the time is rapidly 
approaching when additional administrative organization and power 
will be called for in any event for the handling of other phases of labor 
legislation. 


842 


THE WORKER IN MODERN ECONOMIC SOCIETY 


6 . ECONOMIC THEORIES OF THE MINIMUM WAGE 

[Note : For actual wages paid in industry see chapters ix and x, Part 
Three.-— Ed.] 

a) THE MINIMUM WAGE AND UNEMPLOYMENT I 
AN UNFAVORABLE VIEW 1 

Practical tests of the proposed policy of legally fixing minimum 
wages are now in progress in Australia and New Zealand, in England, 
and in our own State of Massachusetts; but a few things can be 
asserted in advance as necessarily true. The passing of a law certainly 
cannot conjure into existence a fund of new wealth from which the 
additional wages can be drawn. We can be sure, without further 
testing, that raising the prices of goods will, in the absence of counter¬ 
acting influences, reduce sales; and that raising the rate of wages 
will, of itself and in the absence of any new demand for labor, lessen 
the number of workers employed. The real issue is whether industry 
can be made to yield these rates. 

The rate of wages that can be paid is limited by the specific pro¬ 
ductivity of labor. The man A must be worth to his employer what 
he gets, and so must B, C, and D. The total product of the business 
as a whole is not the basis of the payment, but the part of that total 
which is due to the presence of particular individuals. Only when his 
specific product equals his specific pay can he expect to continue in 
the employment. 

Of the employers some get large returns, some small ones, and some 
none; and a certain number are always getting a minus quantity and 
are on the ragged edge of failure. There is no available way of draw¬ 
ing on the returns of the successful employers to make up a fund to 
increase the wages paid by the unsuccessful ones. 

Again, we cannot tax the product of efficient workers and make 
over the proceeds tq the inefficient. Unless the employees A, B, and 
C are worth to their employer six dollars a week, we cannot make him 
pay them that amount, even though D, E, and F are worth seven 
dollars. The employer who is enjoined from paying less than seven 
to any one will do the assorting which his interest impels him to do 
and keep only those who are personally worth what he has to pay 
them. Finally, we cannot make an employer pay to a force that in 
mere number is large as high wages per capita as he could afford to 

1 Adapted with permission from John Bates Clark, “The Minimum Wage,” 
Atlantic Monthly (1913), pp. 289-94. 


PROTECTIVE LEGISLATION 


843 


pay to a smaller force. If we compel the owner of a factory to pay 
more than he can pay to his persent force, he will reduce it till he can 
afford to pay the higher rate to the persons who remain. 

For these reasons, a forcible raising of the rate of wages for workers 
of the lowest grade will lessen the number employed. Some pro¬ 
ducers who can barely run their factories at present will drop out of 
the ranks. Some of the workers who produce barely enough to hold 
their places even under successful employers will drop out. Some 
establishments that can afford to keep a large number of workers at 
a certain rate of pay will find it for their interest to keep a somewhat 
smaller number when the rate is made higher. How great the effect 
of any one of these influences will be, no one can predict with confi¬ 
dence, but what can be asserted with entire confidence is that the 
higher the obligatory rate of pay, the larger will be the number of 
persons remanded to idleness. 

Even though the discharged workers could make themselves 
personally as competent as other members of the force, they could 
not be reemployed, since that would put an end to the scarcity of 
labor, and, by mere increase of supply, reduce the value of the indi¬ 
vidual laborer to his employer. 

If the discharged workers were in a position to wait for ultimate 
changes, they might have their recompense for suffering in the interim; 
but asking them to rely on this is asking that they satisfy the hunger 
of the present with the bread of the future. 

b) THE MINIMUM WAGE AND PARASITIC INDUSTRIES.* 

A FAVORABLE VIEW 1 

The principal question for the economist to consider is how the 
adoption and enforcement of a definite minimum of wages in particular 
trades is likely to affect, both immediately and in the long run, the 
productivity of those trades, and of the nation’s industry as a whole. 
If the employer cannot go below a common minimum rate, and is 
unable to grade the other conditions of employment down to the level 
of the lowest and most necessitous wage earner in his establishment, 
he is economically impelled to do his utmost to raise the level of effi¬ 
ciency of his workers, so as to get the best possible return for the fixed 
conditions. 

'Adapted with permission from Sidney Webb, “The Economic Theory of a 
Legal Minimum Wage,” Journal of Political Economy (December, 1912), pp. 
977-78, 984-90. 


844 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The minimum wage tends steadily to drive business into those 
establishments which are most favorably situated, best equipped, and 
managed with the greatest ability, and to eliminate the incompetent 
or old-fashioned employer. It perpetually stimulates the selection 
of the most efficient workmen, the best equipped employers, and the 
most advantageous forms of industry. And these results are perma¬ 
nent and cumulative. 

When an employer, without imparting any adequate instruction in 
a skilled craft, gets his work done by boys and girls who live with their 
parents and work practically for pocket money, he is clearly receiving 
a subsidy or bounty, which gives his process an economic advantage 
over those worked by fully paid labor. But this is not all. Even if 
he pays the boys and girls a wage sufficient to cover the cost of their 
food, clothing, and lodging so long as they are in their teens, and dis¬ 
misses them as soon as they become adults, he is in the same case. 
For the cost of boys and girls to the community includes not only their 
daily bread between thirteen and twenty-one, but also their nurture 
from birth to the age of beginning work, and their maintenance as 
adult citizens and parents. If a trade is carried on entirely by the 
labor of boys and girls, and is supplied with successive relays who are 
dismissed as soon as they become adults, the mere fact that the 
employers pay what seems a subsistence wage to the young people 
does not prevent the trade from being economically parasitic. 

But there is a far more vicious form of parasitism. If the employers 
in a particular trade are able to take such advantage of the necessities 
of their work people as to hire them for wages actually insufficient to 
provide enough food, clothing, and shelter to maintain them perma¬ 
nently in average health; if they are able to work them for hours so 
long as to deprive them of adequate rest and recreation; or if they can 
subject them to conditions so dangerous or insanitary as positively to 
shorten their lives, that trade is clearly obtaining a supply of labor 
force which it does not pay for. If the workers thus used up were 
horses, the employers would have to provide, in addition to the daily 
modicum of food, shelter, and rest, the whole cost of breeding and 
training the successive. relays necessary to keep up their establish¬ 
ments. In the case of free human beings, who are not purchased by 
the employer, this capital value of the new generation of workers is 
placed gratuitously at his disposal, on payment merely of subsistence 
from day to day. In thus deteriorating the physique, intelligence, 
and character of their operatives, such trades are drawing on the 
capital stock of the nation. 


PROTECTIVE LEGISLATION 


845 


The mere fact that employers are at present paying lower wages 
than the proposed minimum is no proof that the labor is not “worth” 
more to them and to the customers; for the wages of the lowest grade 
of labor are fixed, not by the “worth,” in any sense, but largely by the 
urgent necessities of the “marginal” man, or, rather, the “marginal” 
woman. It may well be that, rather than go without the particular 
commodity produced, the community would willingly pay much more 
for it, and yet consume as much or nearly as much of it, as it now does. 
Nevertheless, so long as the wage earner can be squeezed down to a 
subsistence wage, or, more correctly, a parasitic wage, the pressure of 
competition will compel the employer so to squeeze him, whether the 
consumer desires it or not. 

7. THE MINIMUM WAGE IN OPERATION 

a) HISTORY OF THE MINIMUM WAGE IN AMERICA 1 

Characteristics of the First Minimum Wage Legislation, 

Australian and British 

The origin of minimum wage legislation is to be sought not in this 
country, but in England and Australia. Familiar as this fact is, its 
significance appears to have escaped popular attention. The first 
rudimentary organs of minimum wage administration were the District 
Conciliation Boards of New Zealand, established in 1894 for the com¬ 
pulsory arbitration of labor disputes. Incidental to their general 
duty of so supervising and directing collective bargaining as to preserve 
industrial peace, they were given authority to fix minimum wages. 
The first independent wage-fixing agencies were, however, created two 
years later in the state of Victoria in Australia. They were called 
Special Boards, and were at first established experimentally for certain 
notoriously sweated trades that employed both men and women. These 
boards were composed of an equal number of employers and employees, 
with a chairman from outside nominated by both parties. They were 
given no explicit criterion to go upon in framing their wage awards, 
but were apparently expected to argue out their difficulties in true 
collective bargaining style, under the supervision of the disinterested 
outsider, their chairman, who was to represent the public interest. 

So successful was this system that it was extended to more and 
more trades, was adopted by other Australian states, and finally, in 
1909, by England. The essence of the system is the free discussion 

1 Adapted with permission from Dorothy W. Douglas, “American Minimum 
Wage Laws at Work,” American Economic Review (1919), pp. 701-38. 


8 4 6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


of wage standards, by the authorized representatives of both sides, with 
the aid and criticism of one or more impartial outsiders; the fixing, by 
this responsible bi-partisan group, of standards that were thereupon 
compulsory upon all employers in the industry; and the reservation 
by the government of power to suspend or otherwise mitigate rulings 
that appear positively unfair or inexpedient. No definite cost-of-living 
criterion is set up. The level of the standards finally fixed will rather 
depend upon the general temper of the community in which the law 
is operative and upon the respective bargaining power of the two sides. 
Thus in Australia, a young and rather radical country, with labor 
relatively scarce and powerfully organized, the tendency has been for 
the wages fixed to equal or even exceed the minimum necessary for 
livelihood; while in England, with its cautious public and overstocked 
labor market, the tendency, especially in the first years of the law’s 
administration, has been in the opposite direction: the wages fixed, 
although well in advance of previous rates for the trades concerned, 
have been, as a rule, avowedly below the subsistence minimum. 

Growth of American Legislation: The Massachusetts and 
Oregon Principles Contrasted 

Such was the status of minimum wage legislation when it was first 
seriously considered by this country in 1911. In that year the Mas¬ 
sachusetts legislature passed a resolve requesting the governor to 
appoint an investigating commission “ to 1 study the matter of wages of 
women and minors, and to report on the advisability of establishing 

. . . . [wage] boards.” This Commission on Minimum Wage 

Boards submitted an excellent report together with the draft of a 
bill which, with certain important modifications, was thereupon 
enacted into law. 

In its original form this Massachusetts bill followed the British 
and Australia system as closely as American constitutional limitations 
permitted; but these limitations were of the greatest importance. 

(1) The American law could apply only to women and minors, 
since if it were extended to men it would most certainly (in the present 
state of American public opinion) be held by the courts to run counter 
to the “freedom of contract” clause of the fourteenth amendment. 

(2) The American law must beware of delegating legislative func¬ 
tions to an administrative agency. It must therefore clearly define: 
(a) the conditions under which an industry should fall within the scope 
of the wage commission at all; ( b ) the criteria upon which wage awards 



PROTECTIVE LEGISLATION 


847 


were to be rendered; (c) the exact relation of board to commission. 
Since the commission was the permanent supervisory body, the only 
safe course was, obviously, to centralize all ultimate responsibility in 
its hands. 

The essential features of the Massachusetts bill were accordingly 
as follows: (1) It provided for a permanent appointive commission, 
with power: (a) “to inquire into the wages paid to the female 
employees in any occupation in the Commonwealth if the commis¬ 
sion has reason to believe that the wages paid to a substantial number 
of such employees are inadequate to supply the necessary cost of living 
and to maintain the worker in health ”; ( b ) thereupon to “establish a 
wage board consisting of not less than six representatives of employers 
in the occupation in question, of an equal number of representatives 
of the female employees .... and of one or more disinterested 
persons .... to represent the public . . . and (c) upon the 
receipt of a report from the board to “approve any or all of the deter¬ 
minations recommended .... or [to] recommit the subject to the 
same or to a new wage board.” Once approved the rates were to be 
rendered obligatory, after due notice and public hearing, by a formal 
order of the commission effective in sixty days. Violation of the order 
constituted a misdeamenor punishable by fine and imprisonment. (2) 
The basis of wage determination by the boards was made explicitly the 
double one of cost-of-living plus financial-condition-of-the-business, 
with the business considerations evidently taking the priority: “Each 
Wage Board shall take into consideration the needs of the employees , 
the financial condition of the occupation and the probable effect 
thereon of any increase in the minimum wage paid, and shall endeavor to 
determine the minimum wage .... suitable for a female of ordinary 

ability.” Apparently it was presupposed that the “suitable” 

wage finally reached would commonly be below the actual cost of sub¬ 
sistence. Such a view is borne out by the cautious words of the inves¬ 
tigating commission’s report: “It is the opinion of this commission 
.... that in all these industries the wage scale will stand a readjust¬ 
ment of rates that will raise the lowest wages to something nearer the 
living wage.” 

Even so careful a statute was, however, unable to run the gauntlet 
of the Massachusetts legislature. Before its final passage the bill was 
shorn of its most vital portion, the section on enforcement. The 
“orders” of the commission were changed to mere “recommenda¬ 
tions,” and the penalty of fine and imprisonment to mere adverse 


8 4 8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


publicity. The recalcitrant employer in Massachusetts is now faced 
with nothing worse than the publication of his name in certain news¬ 
papers; and even this penalty he can avoid if he can prove before a 
court that “ compliance with the recommendations of the commission 
would render it impossible for him to conduct his business at a reason¬ 
able profit.” Profits, in other words, are avowedly made a “first 
charge” upon the business. 

The weaknesses of this earliest of American minimum wages laws 
may accordingly be summed up as follows, under the three heads of 
principle of wage determination, character of wage-fixing agency, and 
method of enforcement. 

A. Principle of wage determination. Women (normal, experienced, 
adult women) shall receive wages just high enough to keep them 
alive and physically well, provided their doing so does not threaten to 
interfere either with the general financial prosperity of the trade or 
with the “reasonable profits” of an individual employer. 

B. The agency for the immediate carrying out of these principles 
is a large mixed board of employers and employees, with in no case 
more than one fifth of the total membership representing the dis¬ 
interested public. 

C. The sole means of enforcement is in the indirect pressure of 
public opinion. Boards and commissions therefore know beforehand 
that any ruling that threatens to prove burdensome to the individual 
employer can safely be disobeyed, that anything approaching drastic 
action will tend to defeat its own ends. 

In view of all these limitations it is surprising to find how much has 
been accomplished in Massachusetts. The mere focusing of attention 
upon the problem of wages and livelihood appears to have sufficed 
materially to raise the wages in many submerged trades. The usual 
process is for the board to thresh out what they agree to be a minimum 
subsistence budget, and then to see how close they think they can come 
to that without infringing upon the “financial condition of the busi¬ 
ness” or (what amounts to the same thing) without incurring wholesale 
violation of their decree. Usually the wage finally agreed upon lags 
about a dollar behind the original budget; while this .in turn has 
usually omitted or cut down below the subsistence level a good many 
necessary items; even so, the minimum is usually a distinct advance 
over previous rates. Thus in the brush industry, the first to be investi¬ 
gated, the original budget came to $8.71; the legal “suitable” rate 
was established at 15J cents an hour, which allowed the average 
worker to earn about $7.00, but previous average earnings had been 


PROTECTIVE LEGISLATION 


849 


below $6.00. The percentage of violations at the end of the first 
year was gratifyingly low, and has been reported to be decreasing 
since. 

The example of Massachusetts so encouraged progressive groups 
in various parts of the Union that in the following year eight other 
states passed minimum wage laws. Of these by far the most impor¬ 
tant is Oregon’s. It has served as a model for the bulk of our subse¬ 
quent legislation, and may fairly be contrasted with the original 
Massachusetts statute as showing the growing definiteness and articu¬ 
lateness of the living wage idea. 1 

The Oregon law provides for a central administrative commission 
and subsidiary boards appointed by it after the Massachusetts fashion, 
working through the orthodox machinery of public hearings and 
private investigations and conferences; but this machinery is to be 
used for strictly living wage ends. Section 1 reads: 11 It shall he 
unlawful to employ women in any occupation .... for wages which 
are inadequate to supply the necessary cost of living and to maintain 
them in health and it shall be unlawful to employ minors .... for 
unreasonably low wages.” 

Boards and commissions alike are given no other criterion of wage 
fixing than this simple and explicit one of the “necessary cost of lifing.” 
No mention is made anywhere of suitability, expediency, or the finan¬ 
cial conditions of the industry; instead, in every paragraph the cost- 
of-living basis is repeated in identical words. 

Once the recommendations of a board have been approved by the 
commission, they are issued as obligatory orders, binding within sixty 
days upon every employer in the industry, regardless of his difficulties 
in meeting them; disobedience is punishable by heavy fine and 
imprisonment. Moreover, the personnel of the subsidiary boards 
(here called conferences) is so arranged that impartial decisions are 
more easily rendered: the whole board is smaller, the representatives 
of the public have a larger share of the membership, and every board 
has at least one member of the central commission sitting officially 
on it. In all these ways the double-standard, collective bargaining, 
idea—the official balancing of opposing interests—would seem to have 
given way before that of the living wage pure and simple. 

It may well be asked, What could have caused so radical a change 
in legal principle in one short year ? The answer is probably twofold. 
On the one hand, Oregon is a western state, with more radical views 

1 Recently a bill to make the orders of the commission mandatory has been 
placed before the Massachusetts legislature.— Ed. 



850 THE WORKER IN MODERN ECONOMIC SOCIETY 


in regard to industry, a relatively small number of women employees, 
and a radical method of legislation—the minimum wage was an 
initiative measure. On the other hand, Oregon had the advantage of 
being the second state to pass such a law: she already had the solid 
precedent of Massachusetts to go upon; and, since American constitu¬ 
tionalism required the wage-fixing basis to be quite definite in any case, 
it became relatively easy for the Oregon advocates to insist upon 
sloughing off the “double-faced” and apparently mercenary elements 
of the older law. 

Of the thirteen statutes that have followed Massachusetts and 
Oregon, nine may be said roughly to copy the Oregon model, one the 
Massachusetts model, while three have to be put into a separate 
category as flat-rate laws. 

Chronologically the laws run as follows: 

1912— Massachusetts. 

1913— California, Colorado (on the Massachusetts model, now obsolete), 
Minnesota, Nebraska, Oregon, Utah (flat rate law), Washington, Wisconsin. 

1915—Arkansas (flat-rate law, with commission), Kansas. 

1917— Arizona (flat-rate law), Colorado (new law, on the Oregon model, 
but never put into effect—no appropriations). 

1918— District of Columbia (declared unconstitutional by the D. of C. 
Court of Appeals, Nov., 1922; still in operation pending hearing before the 
Federal Supreme Court). 

1919— North Dakota, Texas, Porto Rico (Texas law repealed in 1921). 

The gap in legislation that occurred during 1915-1917 was due to 
long-drawn litigation in the Oregon case. The law was finally upheld 
by a divided opinion of the Federal Supreme Court—Justice Brandeis, 
as previous counsel for the defense, not voting. 

Flat-rate laws. The flat-rate laws differ from both the earlier 
models in that they operate, not through commissions, but through 
direct flat of the statute itself. The different rates for experienced 
adults, learners, and minors are set once and for all in the body of the 
law, and apply uniformly throughout the state to all industries speci¬ 
fied. The advantages of flat-rate legislation are that it (1) avoids the 
constitutional difficulty of delegation of powers, and (2) is extremely 
simple and cheap to administer. Its overwhelming disadvantage is 
of course its lack of flexibility. 1 In Arizona, Arkansas, and Utah the 
basic flat rates are still $9 and $10 a week. 

1 In Arkansas this is partly obviated by the appointment of a commission 
empowered to alter the rates. 


PROTECTIVE LEGISLATION 


851 


Practical Difficulties in Wage-Setting 

a) The problem of an adequate original wage: —When it comes 
actually to fixing a “living wage,” American boards (i.e. the subsidiary 
boards under the commission) are confronted with a whole series of 
difficulties. In the first place, whatever may be said in the language 
of the statute itself, every board member knows that in practice the 
representatives of the employers and all who sympathize with them 
are bound to take the condition of the industry itself into consideration. 
What else, indeed, are they there for ? If the object of the law were 
merely to establish an abstractly scientific standard of living for each 
employee, regardless of its reaction upon conditions of employment 
and trade in general, why work through representative boards at all ? 
Why not merely have a central executive commission or, better still, 
a single paid expert whose duty it would be to adjust well-established 
family standards (such as those issued by the United States Bureau of 
Labor Statistics) to local conditions and the needs of the single woman, 
revising these standards at appropriate intervals as the cost of living 
went up or down ? In practice everyone knows that minimum-wage 
legislation is as yet in a tentative stage, that public opinion is by no 
means “ solid ” behind it, and that the work of conciliating and bringing 
into co-operative relations the members of all parties represented on 
a board is still by no means the least of its functions. 

In the second place, the representatives of the employees (them¬ 
selves, as a rule, working women) are seldom of a caliber at all com¬ 
parable to that of the other two groups. 

Finally, all three groups (the employees of course especially) are 
apt to be woefully untrained in the handling of budget material. 

The following quotations from representatives of minimum-wage 
commissions may help to illustrate the bargaining character of boards. 
The award of $13.20 was really a compromise between the employers 
and employees who served on the conference, the former having 
recommended $12 and the latter $15 (Washington). 

We consider that our minimum wage is very low. However, it was as 
much as the employers on our Board would concede (Kansas). 

The employees were lacking in initiative because of their fear of the 
employers (Minnesota). 

In the final session, with only members of the board present, the wage 
question is always a struggle .... and when it gets to the “bargaining” 


THE WORKER IN MODERN ECONOMIC SOCIETY 


852 

point (which it always has), the Commission should insist on the “cost of 
living.” 

b ) The time element: difficulties in revising rates. —One of the dis¬ 
couraging things about minimum-rate making is that during a period 
of rapidly changing prices, such as we have had ever since our first 
American wage laws went into effect, it takes a very short time for a 
rate to become antiquated. When that happens it is difficult to get 
the commission to act—to start afresh on the weary round of investiga¬ 
tions and hearings and orders. On the other hand, if the original 
survey has been inexact, any revision based in the main on these 
previous findings will incorporate their errors. 

Recommendations for the Future 

1. First and foremost among our needs is undoubtedly that of a 
clear, unequivocal basic standard of living for the working woman, a 
standard that shall take account of the whole range of her necessities, 
not only day by day but year by year. For this we should have a 
standard budget, formulated preferably by our federal Bureau of 
Labor Statistics, revised by them periodically in accordance with 
changes in the cost of living and adjustable by local boards and 
commissions to local conditions. 

2. To reduce this budget to terms of weekly wage rate, we must 
have ( a ) a clear-cut policy on the part of boards and commissions that 
the “living wage” shall mean a “living income” the year round; ( b ) 
more accurate information by these bodies as to local irregularities of 
employment; (c) a simple method of advancing hourly rates by 
“irregularity differentials” whenever trades or individual establish¬ 
ments fail to provide full time work. 

3. A necessary corollary to such a full living standard would be 
the extension of our special provisions for sub-standard workers, (a) 
For defectives, who would now of course include the mentally inca¬ 
pable, the double system of individual licensing plus limitation of num¬ 
bers in any one establishment might well be revised to include a 
third element, namely, the selection of a series of specially “approved” 
occupations, in which such workers could be allowed to congregate 
without limit; each plant in the “approved” list being subject to 
special supervision by the commission—all defective workers mean¬ 
while, whether working in an “approved” establishment or at large, 
to be inspected and relicensed periodically. ( b ) For inexperienced 
workers and minors we need a more scientific series of statewide 
“rock-bottom” minimums, graded according to age; and above these, 



PROTECTIVE LEGISLATION 


853 


a series of specially adjusted apprentice minimums that should be as 
varied as the trades they represent. That is, it should be left to the 
discretion of the commission and boards whether for a given trade 
there should be any distinction at all between the comparatively new 
and the old hand, or between the youthful and the adult; and if there 
should, just what ought to be their relative rates of advance. The 
number of apprentices allowed in any one establishment should doubt¬ 
less continue to be limited. 

A Flexible Standard 

Next only to the need for a standard that shall be adequate at the 
outset, is the need for a greater flexibility in its application. I have 
already pointed out the need for (1) more rapid revision of established 
rates in times of sudden price changes, and have suggested that for 
specified periods of a year or so the commissions be given ad interim 
power to revise existing rates. They could readily do this in accord¬ 
ance with the cost-of-living index numbers which the Bureau of Labor 
Statistics could furnish them. Two other devices for increasing flexi¬ 
bility are, however, no less important. These are (2) the forestalling 
of bad wage conditions that are as yet only apprehended, by empower¬ 
ing the commission to issue rulings, for trades that may at the time 
still be on a living basis; and (3) the easing off of radical advances for 
the employer by permitting the commission under exceptional circum¬ 
stances to distribute the scheduled advance in wages over a specified 
period. 

Both these innovations have recently (1918) been introduced into 
the British law, and are of great significance: the anticipation of low 
wages is especially valuable in a time of sudden oversupply of labor 
such as has occurred in many industries since the close of the war; 
while the gradual application of certain rates is sure to become a 
practical necessity as the living-wage idea becomes more firmly estab¬ 
lished and radical advances grow more common. Where some com¬ 
promise with purely financial considerations appears inevitable, this 
form is infinitely preferable to the current one (of setting up a final rate 
that is sub-standard), since this proposed device is self-remedying and 
deceives no one. 

/ Centralization of Administrative Responsibility 

Finally we need a greater concentration of power and of the 
responsibility that goes with it if our commissions are to operate effect¬ 
ively in the larger industrial states. The writer has already pointed 


854 THE WORKER IN MODERN ECONOMIC SOCIETY 

out the advantages that accrue from (i) empowering the commission 
upon occasion to overrule the advice of the boards and (2) giving the 
executive officer of the commission a voting membership on both the 
boards and the commission itself. The combination of these two 
devices should go far toward helping to organize the information at the 
commission’s disposal and bringing it to bear impartially upon the 
formation of a consistent policy. 

b) EFFECTS OF THE MINIMUM WAGE IN CANADA 1 

1. The British Columbia statistics throw light upon the question as 
to whether the “minimum tends to become the maximum.” In the 
mercantile occupation the average in 1920 is shown to have been $3.19 
in excess of the minimum weekly wage, among the laundry workers 
the average was $1.58 above the minimum, in manufacturing $2.64, 
in public housekeeping $2.58, and in office employments $4.43. It is 
therefore apparent that the minimum wage has not tended to become 
the maximum. 

2. Has the minimum wage decreased the disparity in pay between 
the lower and higher grade workers ? The writers have analyzed the 
British Columbia statistics for 1918 and 1919 for the mercantile and 
laundry industries and have found that there was much less variation 
in earnings (at least as far as the middle half 2 of the cases were con¬ 
cerned) after the minimum wage had been put into effect than 
previously. The relative variation in the mercantile industry of 
the middle half 2 of the cases in 1919 was approximately one-half of the 
variation in 1918, and in the laundry trade it was much less than one- 
half. Little doubt can exist therefore of the tendency of the minimum 
wage in British Columbia, by leveling up the wages of the more poorly 
paid workers, to bring about a greater degree of standardization and 
uniformity in wages than would otherwise exist. 

3. Finally, the figures show quite conclusively that there was not 
a substitution of minors for adults. In each industry, with the excep¬ 
tion of the mercantile trade, the percentage of juveniles decreased. 
This was true even of manufacturing, where the Board finally set no 
wage minimums for those under eighteen. 

1 Adapted with permission from K. Derry and P. H. Douglas, “The Minimum 
Wage in Canada,” Journal of Political Economy (April, 1922), pp. 169-71. 

2 1.e., ranging the cases in order from the lowest to the highest, and discarding 
the lowest quarter and the highest quarter of them. 


PROTECTIVE LEGISLATION 



c) OPERATION OF THE BRITISH TRADE BOARDS ACT OF 1918 1 

In the year 1885 and the succeeding years, public attention was 
directed to the evils of “sweating” in industry, that is to say, to the 
unfair exploitation by unscrupulous employers of the necessities of 
the poorer and more helpless class of workers by requiring them to 
work for wages inadequate to their needs or for excessive hours or 
under insanitary conditions. 

In 1908, a Report to the Home Department on the Working of the 
Wages Board in Australia and New Zealand and a report by a Select 
Committee of the House of Commons on Home Work, led to the 
passing of the Trade Boards Act of 1909. 

Trade Boards Act , igog .—The distinguishing features of this Act 
were, (1) that it was applicable only to trades in which wages were 
“exceptionally low”; (2) that in the trades to which the Act applied 
minimum rates of wages were to be fixed by a body composed of repre¬ 
sentatives of employers and employed in equal numbers with the addi¬ 
tion of some independent persons called “appointed members”; and 
(3) that the rates when fixed and made obligatory were to be enforce¬ 
able by the machinery of the criminal law. 

In addition to the four trades mentioned in the Act, four more were 
added by Provisional Order in the year 1913. The Boards in fixing 
minimum rates displayed care and prudence, and the effect of their 
operations was gradually to remove from the trades concerned the 
reproach of “sweating,” and (so far as the evidence shows) without 
injury to those engaged in the industries or to the consumer. 

In the year 1917, the Whitley Committee recommended that in 
those industries in which there existed little or no organization the 
machinery of the Trade Boards Act should be applied “pending the 
development of such degree of organization as would render possible 
the establishment of a National Council or District Councils.” 

Trade Boards Act, igi 8 .—The issue of this and other recommenda¬ 
tions was followed by the passing of the Trade Boards Act, 1918. By 
that statute the Act of 1909 was amended in certain respects, of which 
the most important are the following: 

1. The power given by the Act of 1909 to the Board of Trade to make 
a Provisional Order applying the Act to a new trade was made exercisable 
by Special Order of the Minister of Labour without confirmation by 
Parliament. 

1 Adapted from the Report to the Minister of Labour of the Committee of Enquiry 
into the Working and Effects of the Trade Boards Acts (April, 1922), pp. 5-23. 


856 THE WORKER IN MODERN ECONOMIC SOCIETY 


2. The Minister was authorized to make such an Order, not (as in the 
original Act) if he was “satisfied that the rate of wages prevailing in any 
branch of the trade is exceptionally low as compared with that in other 
employments” but if he was “of opinion that no adequate machinery exists 
for the effective regulation of wages throughout the trade and that accord¬ 
ingly, having regard to the rates of wages prevailing in the trade or any 
part of the trade, it is expedient that the principal Act should apply to that 
trade.” 

3. The period of six months during which a rate was not to be made 
obligatory under the original Act was abolished and rates fixed by a Board 
were to become obligatory on a date fixed by the Minister in his Order of 
Confirmation. 

The Act does not in express terms give effect to the suggestions of 
the Whitley Committee as to the substitution for Trade Boards of 
Joint Standing Industrial Councils in cases where organization has 
improved; but it empowers the Minister, if he is of opinion that the 
conditions of trade have been so altered as to make the application 
of the Act unnecessary, to make an Order withdrawing the trade from 
the operation of the Act. 

Effect of the Act of iqi8. —The passing of the Act of 1918 was 
followed by a large increase in the numbers of Trade Boards bringing 
the total on the 31st of December, 1921, up to sixty-three. The Acts 
have now been applied to trades employing about 3,000,000 workers, 
of whom about 70 per cent are women. 

The new Act also produced a considerable development in the 
exercise of the rate-fixing powers of the Boards, for the circumstance 
that a Board could now be formed for a trade, not only when the wages 
prevailing in the trade were “ exceptionally low,” but in any case where 
no adequate machinery existed for the effective regulation of wages, 
was taken as an invitation to use the Boards less as instruments for the 
prevention of “sweating ” than as machinery for the general regulation of 
wages in the trades concerned. Thus of the 37 British Boards whose 
rates were in operation on the 31st December, 1921, all but 41 had 
fixed different time-rates for different classes of male workers, and all 
but 18 had fixed different time-rates for different classes of female 
workers. 

Some of the wage-scales adopted by the Boards are of an elaborate 
character, as in the case of the Brush and Broom trade Board where 
there are about 1500 different piece-rate items. It is admitted that 
in some instances the rate fixed as a minimum has been, not a mini¬ 
mum, but the current rate of wages paid under existing trade agree- 


PROTECTIVE LEGISLATION 


§57 


ments; and cases have been brought to our notice in which a Board 
has not really considered the question of minima at all, but has been 
content to adopt and make compulsory a scale of wages agreed upon 
by the organizations of employers and workmen outside the 
boardroom. 

The movement of Trade Board wages during and for some time 
after the war was almost uniformly upwards, and during that period 
the complaints were few; but in the year 1920, trade became depressed, 
and it was found that reductions of the wage scales fixed by Trade 
Boards were often resisted by the workers, and even when assented 
to could not be legalized without a delay of some months. Thereupon 
dissatisfaction ensued and under these conditions we were requested 
to enquire into the working of the Trade Board legislation. 

Conclusions .—Upon a review of the evidence, we come to the con¬ 
clusion that while the effect of the Trade Board system on trade and 
industry has occasionally been stated in terms of exaggeration, there 
is substance in the allegation that the operations of some of the 
Boards have contributed to the volume of trade depression and 
unemployment. 

Unfortunately for the Trade Board system, many of the increases 
in wages settled by the Boards came into operation at a moment when 
trade was falling, and we are satisfied that in some instances the addi¬ 
tional burden so imposed on traders made it difficult for those trades 
to adjust themselves to the altered conditions. Within certain limits, 
an increase in the cost of production can be “passed on” to the con¬ 
sumer, with the result that the general level of prices is raised and 
the consumer (including the worker) suffers accordingly; but in time 
a point is reached where the consumer ceases to buy, and then follow 
decline of trade, the closing of workshops, short time and the discharge 
of workers. 

On the other hand we think it is established that the system has 
had beneficial effects. It appears to us that, speaking generally, 
Trade Boards have succeeded in abolishing the grosser forms of under¬ 
payment and regularizing wages conditions in trades brought under the 
Acts. Moreover in establishing statutory minima Trade Boards have 
afforded protection to the good employer, able and willing to pay a 
reasonable rate of remuneration to his workers, from unscrupulous 
competitors. Nor must it be overlooked that in some instances the 
enforcement of higher rates of wages has acted as a stimulus to 
improvement in working methods. 


858 THE WORKER IN MODERN ECONOMIC SOCIETY 


We are also satisfied that the operation of the system has con¬ 
tributed on the whole to the improvement of industrial relations; and 
this effect is especially marked in the case of the trad.es to which the 
Act of 1909 was applied and which have had the longest experience of 

the working of the system.The working of the Trade Board 

machinery by bringing the two sides together to discuss wages ques¬ 
tions “round a table” has tended to prevent the occurrence of indus¬ 
trial disputes. 

Finally we think that it is established that the operation of the 
system has led to a strengthening in organization on both sides. 

8. RECOMMENDATIONS FOR REVISION OF THE 
BRITISH TRADE BOARDS ACTS 1 

For the faults of the present Trade Boards Acts various remedies 
are proposed, some looking to the complete abolition of the Boards 
in their present form, others to a revision of their powers. 

Proposals for repeal .—The total repeal of the Trade Boards Acts 
was proposed by very few of the Associations representing employers, 
and we are of opinion that such a repeal would not be in the public 
interest. It appears to be almost universally admitted that the 
oppression by some unscrupulous employers of their needy and help¬ 
less work-people which existed before the year 1909 was an evil calling 
for legislative remedy. If the Trade Boards were abolished without 
the creation of some effective machinery to take their place, the earn¬ 
ings of these poorer workers~would be likely to fall very rapidly and 
“sweating” would return. 

National minhnum wage .—In some cases proposals for the repeal 
of the Trade Boards Acts were accompanied by a suggestion that there 
should be substituted for them legislation providing for a national 
minimum wage to be payable in all trades alike. We are unable to 
concur in that suggestion. Industries differ widely from one another 
in their history and conditions, their earning capacity and their expo¬ 
sure to foreign competition; and employments differ in the character 
and strain of the work involved and in the equipment required by the 
worker. 

Such variations can be far more effectively dealt with by a system 
of separate Trade Boards for individual trades than by an inflexible 

1 Adapted from the “Report to the Minister of Labour of the Committee of 
Enquiry into the Working and Effects of the Trade Boards Acts” (April, 1922), 
pp. 24-40. 



PROTECTIVE LEGISLATION 859 

minimum for all trades. Further, in some industries the home¬ 
worker cannot be adequately protected except by fixing minimum 
piece-rates, and it is clear that such rates cannot be fixed on a national 
basis for all trades. Nor would it be practicable under such a system 
to provide effectively for the sub-normal worker; for a worker may 
be sub-normal for some occupations but not for others. Nor would it 
be right to leave wholly out of account the danger of constant political 
pressure for the increase or reduction of a national minimum wage. 

Restriction of rate-fixing powers .—But while we are of opinion that 
the Trade Board system should be retained, we are convinced 
that the time has come when a definite decision should be taken by 
Parliament as to the conditions under which Trade Boards should be 
set up and as to their powers and functions when established. Since 
the passing of the Act of 1918, a Board may be set up for any trade 
which is not fully organized, and the only direction given to the 
Minister in setting up a Board is that he shall “have regard to” the 
rate of wages prevailing in the trade. When a Board is established 
it is directed to fix a minimum rate for time-work and is empowered 
to fix other minimum rates, which may be different for different pro¬ 
cesses or classes of workers or for different areas; but no guidance is 
given as to the basis upon which a minimum is to be fixed. As a result 
some Boards have had regard only to the cost of living, while others 
have taken into account the value of work done and the charge which 
the trade can bear. In one case we were informed that the minimum 
was taken to be the lowest wage payable to the least skilled worker 
in the cheapest living area covered by the rate; while in another it 
was defined as a wage sufficient to provide a young woman of 18 with 
the means sufficient to enable her to maintain herself without assist¬ 
ance and to enable a man of 21 to contemplate marriage. 

The issue so raised appears to us to be of vital importance to the 
future of British industry. In other words, is the intention of the 
Act of 1909, which we believe to have been directed to the prevention 
of “sweating,” to prevail; or is effect to be given to the interpretation 
widely put upon the Act of 1918, namely, that it is to be used as an 
instrument for the public regulation of wages throughout the industries 
concerned ? In our opinion, the former is the correct view. 

It is one thing to say that an employer shall not pay to his adult 
worker a sum insufficient for his or her maintenance under the condi¬ 
tions of the time; it is quite another thing to provide that he shall not 
pay to a skilled worker of a particular class less than a given higher 


86 o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


rate, and that if he does so he shall be liable to fine or imprisonment. 
It may be desirable that the higher wage should be paid, and it may 
not be unreasonable for a trade organization to insist on that wage 
being paid and to enforce its decision by economic means; but to 
compel the payment by the threat of criminal prosecution appears to 
us to be an oppressive use of the powers of the State. 

Recommendations .—In the first place we are of opinion that the 
Minister should not be empowered to apply the Acts to a trade unless 

(a) an unduly low wage prevails in the trade or some branch of it, and 

(b) there is a lack of such organization among the workers as is required 
for the effective regulation of wages in the trade. 

With regard to the functions of a Trade Board when formed, we 
are of opinion that the Trade Board system should be directed, first, 
to giving protection to the workers in each trade by securing to them 
at least a wage which approximates to the subsistence level in the 
place in which they live and which the trade can bear; and, secondly, 
to using the machinery established for that purpose in encouraging the 
improvement of relations between employers and employed and the 
development of trade organization. For this purpose, it is, we think, 
necessary to draw a sharp distinction between the fixing of (A) a true 
minimum wage—that is to say, the least wage which should be paid 
to the ordinary worker of the lowest grade of skill engaged in the trade, 
and (B) those other and higher scales of payment which it is desirable 
to secure for the part-skilled and skilled workers. The former—the 
true minimum—should be fixed by the vote of a majority of the whole 
Board, including the Appointed Members, and when confirmed should 
be enforced by all the authority of the law; but the latter (which, by 
whatever name it may be called, will in fact be a standard rate) should 
be determined by agreement between the two sides of the Board with¬ 
out the vote of the Chairman or Appointed Members, and when 
confirmed should be enforceable by civil proceedings only. 

All the rates under class A would be capable of being fixed sep¬ 
arately for men, women and juveniles, and might be different in differ¬ 
ent areas. Class B would comprise all rates other than the above, 
such as special rates for skilled workers, or workers engaged in a 
special process, and minimum piece-rates for in-workers. The class 
B should be capable of being fixed for a limited period, or should be 
determinable by notice given by either side of the Board. 

District rates and district committees .—We recommend that as 
regards any manufacturing or productive trade to which the Acts 
apply the Minister of Labour be authorized, after consultation with 


PROTECTIVE LEGISLATION 


861 

the Trade Board for such trade, to set up for any area a district com¬ 
mittee; that where a district trade committee has been established it 
shall be consulted by the Board before a proposal for a rate affecting 
the district is made; that a Trade Board which has established a 
district trade committee shall have power at any time to dissolve it. 

With regard to the distributive and the retail making-up trades 
(such as Millinery and Bespoke Tailoring) and the Laundry Trade, 
the considerations in favour of district rates have a special force. 
Persons engaged in those trades are relatively free from the competition 
of other districts or of foreign countries, and rates may be fixed with 
regard to local conditions without giving undue advantage to one 
district over another. Further, it is in trades of this character that 
the pressure of rates fixed for the whole Kingdom has been most 
severely felt. It appears to us that in respect to these distributive 
and making-up trades it may be the better course to divide the country 
into suitable districts and to set up for each such district a permanent 
District Board composed of representatives of employers and workers 
with an independent chairman, which shall have charge of the trade 
• in the area. 

With a view to securing such measures of uniformity in the deci¬ 
sions of these District Boards as may be desirable, we recommend 
that a co-ordinating committee for each trade or group of trades for 
which District Boards are so formed be set up. 

Juvenile workers and learners .—As to the question of rates for 
juvenile workers and learners, which has been much debated before 
us, it appears to us that some Boards have been too ready to fix 
minimum rates for learners rising periodically (sometimes every six 
months) with the age of the learner, with the result that learners 
have been little encouraged to qualify themselves for an increase of 
pay by care and diligence in their work, and that the employment of 
late entrants has been discouraged. 

We therefore recommend that the Trade Boards be recommended 
in fixing minimum rates for learners to have regard to experience not 
less than to age and to make suitable provision for late entrants; that 
Trade Boards be recommended in trades where apprenticeship is of 
value to encourage that system by fixing a minimum rate for appren¬ 
tices lower than that fixed for learners of the same age. 

Minor amendments .-—With a view to enabling Trade Boards to 
fix wages on a sliding scale, we recommend that Trade Boards be 
authorized to fix a series of minimum rates to come into operation 
contingently on the occurrence of specified events. The power of 


862 


THE WORKER IN MODERN ECONOMIC SOCIETY 


fixing overtime rates enables the Trade Boards to deal indirectly with 
the question of working hours, and we recommend that Trade Boards 
be authorized in fixing overtime rates to make the payment of a daily 
overtime rate conditional on the completion by the workers of a speci¬ 
fied number of hours’ work in the week. 

Constitution of boards .—A Trade Board now commonly consists of 
from 15 to 20 Representative Members on each side, together with 3 
Appointed Members, including the Chairman. The Representative 
Members are not elected, that method having been found impracti¬ 
cable, but are nominated by the Minister, generally on the suggestion 
of the trade organizations on each side. The Appointed Members are 
persons wholly unconnected with the industry, generally Barristers 
or Professors or retired Civil Servants, or (for trades in which women 
are employed) women engaged in social work. It does not appear to 
us that legislation dealing with this matter is required; but we think 
that the Minister should secure that not less than three-quarters of 
the Representative Members on each side shall be or have been 
engaged in the trade. 

9. LEGAL STATUS OF THE MINIMUM WAGE 

[Note: As soon as the Oregon minimum wage law was passed in 
1913, its constitutionality was challenged in two cases (Stettler v. 
O'Hara and Simpson v. O'Hara). Coming before the Federal Supreme 
Court in 1917 the court divided 4 to 4. Mr. Brandeis, the original 
attorney for the defense, having meanwhile become an associate 
justice of the Court, was unable to cast the deciding vote. Under 
such circumstances the Supreme Court renders no opinion of its 
own, but merely upholds the decision of the lower court which in 
this case had been favorable. 

The original favorable decision of the Oregon court in this case 
had been based upon reasoning practically identical with that in the 
ten-hour case. Excerpts from the argument of the plaintiff and the 
opinion of the Oregon Supreme Court follow.— Ed.] 

a) ARGUMENT OF PLAINTIFF (EMPLOYER), BEFORE THE SUPREME 

COURT OF OREGON (1913) 1 

At the present time plaintiff is employing in his said manufactur¬ 
ing establishment in the City of Portland, forty-two adult experienced 
women, many of whom he is paying less than $8.64 per week. If he 

1 Adapted from Transcript of Record Supreme Court of the United Stales 
(October, 1916), No. 25, pp. 8-10. 


PROTECTIVE LEGISLATION 


863 


shall be required to pay each of said women employees the sum of $8.64 
per week, such wages would so increase the expenses of conducting his 
business that the same would be operated and conducted at a loss 
instead of at a profit. This plaintiff is compelled to compete with 
manufacturers of paper boxes in other states who are not obliged or 
required to pay as high wages. 

And this plaintiff avers that said act of the Legislative Assembly 
is in violation of the Constitution of this state and of the United States 
in that it deprives plaintiff of his property and of his liberty without 
due or any process of law. And plaintiff avers that a wage of $6.00 
per week for the women to whom the same is paid in said business is 
not an unreasonably low wage, but the same is adequate compensa¬ 
tion for the services rendered. That the women employed in said 
factory who receive less than $8.64 per week are incompetent by 
reason of age, inability or otherwise to earn greater wages than they 
are being paid. That many of said women have other sources of income 
and are living with parents or other relatives and desire and expect to 
make only a portion of their support, and if plaintiff is compelled to 
pay to each of his adult experienced women ; wage of $8.64 plaintiff 
will be necessarily restricted to the employment only of women who 
are capable of earning it, and said less competent employees will be 
prevented from laboring for the plaintiff. 

b) DECISION OF THE OREGON COURT 1 

“Common belief” and “common knowledge” are sufficient to 
make it palpable and beyond doubt that the employment of female 
labor as it has been conducted is highly detrimental to public morals. 
Every argument put forward to sustain the maximum hours law 
applies equally in favor of the constitutionality of the minimum wage 
law. Counsel urges that the law upon this question interferes with 
plaintiff’s freedom of contract. But he fails to take note that by 
reason of this larger freedom the tendency is to return to the earlier 
conditions of long hours and low wages. The legislature has evi¬ 
dently concluded that even in Oregon there are many women employed 
at inadequate wages—employment not secured by the agreement of 
the worker at satisfactory compensation, but at a wage dictated by 
the employer. The worker in such a case has no voice in fixing the 
hours or wages, or choice to refuse it, but must accept it or fare worse 

We think we should be bound by the judgment of the legislature 
that there is a necessity for this act. 

1 Ibid., pp. 20-23, 25, and Transcript No. 26, p. 14. 


86 4 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The guaranties of the fourteenth amendment are not new in Ameri¬ 
can history; they existed substantially in the constitutions of many 
of the states, and, excepting as to the status of the negro, were well- 
nigh universal in the United States. Primarily for the better protec¬ 
tion of a newly-enfranchised race, it was thought expedient to make the 
general government a coguarantor with the states of these fundamental 
privileges of freemen. But that the effect of this would be to limit 
the power of the states to enact reasonable laws for the protection of 
their women and children against the consequences of labor for a 
length of time tending to impair health or at a wage barely sufficient 
to sustain life, never entered the imagination of the statesmen who 
framed it. 

c) THE DISTRICT OF COLUMBIA CASE 

[Note: In 1917 Congress passed a law on the Oregon model for the 
District of Columbia. So well conducted was the preliminary agita¬ 
tion for the measure that no one appeared before the Congressional 
Committee to oppose it (even the merchants’ and manufacturers’ 
association of the District speaking in its favor), and the law passed 
both houses by a large majority. Thus favorably launched, the 
Minimum Wage Commission proceeded to a vigorous erection of 
standards and soon brought upon itself the opposition of certain 
of the employing interests, notably the laundries and hotels and 
restaurants. These groups presently (1920) concentrated their forces 
in a series of bills of injunction brought by an institution of a semi- 
philanthropic character, the Children’s Hospital, and when the 
Supreme Court of the District dismissed the bills, appealed their cases 
to the Court of Appeals. 

When they came to be heard by the Court of Appeals one of its 
members was ill, and his place had been temporarily taken by another 
justice. The procedure in such cases is that the substitute justice 
finishes whatever cases he begins. In this case the substitute justice 
was favorable to the law and joined with the Chief Justice first in 
upholding it, and then in denying the appellants a rehearing. 

Meanwhile, the absent justice who was strongly opposed to the law 
decided to return and take a hand in the case himself. He accordingly 
joined with the third member of the court (who had also always been 
opposed to the law) in directing over the protest of the Chief Justice 
that the case be reargued. In the words of the Chief Justice: “It 
would seem from the foregoing that the appellants, finding themselves 
defeated, sought a justice who had not sat on the case but who they 
believed would be favorable to them, and induced him, by an appeal 


PROTECTIVE LEGISLATION 


865 


directed to him personally, to assume jurisdiction and join with the 
dissenting justice in an attempt to overrule the decisions of the 
court. I shall not characterize such practice—let the facts speak for 
themselves. ” 

It was upon this argument that these two judges reversed the first 
judgment of the court and declared the law unconstitutional (1922). 
On April 9, 1923, the Federal Supreme Court declared the law uncon¬ 
stitutional.— Ed .1 

The favorable and unfavorable opinions of the District of Columbia 
Courts have been in substance as follows: 

i. Favorable Opinion of the Court of Appeals of the District as 

Constituted June 6, 1921 1 

The only ground upon which the court could review the action of 
Congress would be that “a statute purporting to have been enacted 
to protect the public safety, has no real or substantial relation to those 
objects, or is a palpable invasion of rights secured by the fundamental 
law.” (Cases cited.) 

The first inquiry was whether or not the act has any real or sub¬ 
stantial relation to its declared object. “For answer we may resort 
to common knowledge.” (Cases cited.) “It is equally well known 
that if a working woman does not receive a sufficient wage to supply 
her with necessary food, shelter, and clothing, and she is compelled 
to subsist upon less than her requirements demand, the result must be 
that her health would be injuriously affected.” 

The next question taken up was whether or not it was invalid as 
interfering with freedom of contract. “That it does must be conceded, 
* but that is not fatal. Every statute exerting the police power inter¬ 
feres with freedom of contract.‘Liberty’ (citing a Supreme 

Court decision) ‘implies the absence of arbitrary restraint, not immu¬ 
nity from reasonable regulations and prohibitions imposed in the 
interest of the community.’ .... 

“If we may accept the House Committee’s report, an evil existed. 
The workers, by reason of the law of competition, were unable to 
remove it. They were compelled to submit or go without work. 
Congress alone could apply the remedy.” 

(Concurring opinion of Judge Stafford) .... “ the asserted right 
of the employer to be served by anyone who is willing to work for him, 
and at any wage the worker is willing to accept, must be subordinate 

1 Opinion delivered by Chief Justice Smyth, quoted in Monthly Labor Review 
(July, 1921), p. 203. 




866 


THE WORKER IN MODERN ECONOMIC SOCIETY 


to the right of the public to see that those women who are obliged to 
work for a living shall not be obliged to work for less than a living.” 

ii. Unfavorable Majority Opinion of the Court of Appeals as 
Constituted November 6 , IQ22 1 

Legislation tending to fix the prices at which private property 
shall be sold, whether it be a commodity or labor, places a limitation 
upon the distribution of wealth and is aimed at the correction of the 
inequalities of fortune which are inevitable under our form of govern¬ 
ment, due to personal liberty and the private ownership of property. 
These principles are embodied in the Constitution itself, and to inter¬ 
fere with their freedom of operation is to deprive the citizen of his 

constitutional rights.The police power can not be employed 

to level inequalities of fortune. Private property can not by mere 
legislative or judicial fiat be taken from one person and delivered to 
another, which is the logical result of price fixing. 

As a proper exercise of the police power we are of the opinion that 
the act can not be upheld. High wages do not necessarily tend to 

good morals, or the promotion of the general welfare.A wage 

based upon competitive ability is just, and leads to frugality and honest 
industry and inspires an ambition to attain the highest possible effi¬ 
ciency, while the equal wage paralyzes ambition and promotes 
prodigality and indolence. It takes away the strongest incentive to 
human labor, thrift, and efficiency, and works injustice to employee 
and employer alike, thus affecting injuriously the whole social and 
industrial fabric. Experience has demonstrated that a fixed minimum 
wage means, in the last analysis, a fixed wage; since the employer, 
being compelled to advance some to a wage higher than their earning 
capacity, will, to equalize the cost of operation, lower the wage of the 
more competent to the common basis. 

It should be remembered that the three fundamental principles 
which underlie government and for which government exists—the 
protection of life, liberty, and property—the chief of these is property, 
not that any amount of property is more valuable than the life or 
liberty of the citizen, but the history of civilization proves that when 
the citizen is deprived of the free use and enjoyment of his property 
anarchy and revolution follow, and life and liberty are without 
protection. 

1 Majority decision, denying the constitutionality of the Act, delivered by 
Justice Van Orsdel, quoted in Monthly Labor Review (December, 1922), pp. 222-24. 



PROTECTIVE LEGISLATION 


867 


Take from the citizen the right to freely contract and sell his labor 
for the highest wage which his individual skill and efficiency will 
command and the laborer would be reduced to an automaton—a mere 
creature of the State. It is paternalism in the highest degree, and the 
struggle of the centuries to establish the principle that the State exists 
for the citizen, and not the citizen for the State, would be lost. 

If, in the exercise of the police power for the general welfare, power 
* lies in the legislature to fix the wage which the citizen must accept or 
choose idleness, or, as in the case of Willie Lyons, be deprived of the 
means of earning a living, it is but a step to a legal requirement that 
the industrious, frugal, economical citizen must divide his earnings 
with his indolent, worthless neighbor. The modern tendency toward 
indiscriminate legislative and judicial jugglery with great fundamental 
principles of free government, whereby property rights are being 
curtailed and destroyed, logically will, if persisted in, end in social 
disorder and revolution. 

Hi. Opinions of the Federal Supreme Court 1 

Mr. Justice Sutherland: It is simply and exclusively a price¬ 
fixing law, confined to adult women who are legally as capable of con¬ 
tracting for themselves as men. It forbids two parties having lawful 
capacity, under penalties to the employer, in contract freely with 
one another in respect of the price for which one shall render service 
to the other in a purely private employment where both are willing, 
perhaps anxious, to agree even though the consequence may be to 
oblige one to surrender a desirable engagement and the other to dispense 
with the service of a desirable employee. 

The price fixed by the board need have no relation to the capacity 
of earning power of the employee, the number of hours which may 
happen to constitute the day’s work, the character of the place where 
the work is done, or the circumstances or surroundings of the employ¬ 
ment; and while it has not other basis to support its validity than 
the assumed necessities of the employee, it takes no account of any 
independent resources she may have. It is based wholly on the 
opinion of the members of the board and their advisers, perhaps an 
average of their opinion if they did not precisely agree, as to what 
will be necessary to provide a living wage for a woman, keep her in 
health, and preserve her morals. 

1 Minimum Wage Board of the District of Columbia v. The Children's Hospital 
of the District of Columbia (April 9, 1923). 


868 


THE WORKER IN MODERN ECONOMIC SOCIETY 


It applies to any and every occupation in the District of Columbia 
without regard to its nature or the character of the work. 

The ancient inequality of the sexes otherwise than physical, as 
suggested in the Muller v. Oregon case has continued with “diminishing 
intensity” in view of the great—not to say revolutionary—changes 
which have taken place since that utterance in the contractual, 
political, and civil status of women culminating in the Nineteenth 
Amendment. It is not unreasonable to say that these differences 
have now come almost if not quite to the vanishing-point. In this 
aspect of the matter, while the physical differences must be recognized 
in appropriate cases and legislation fixing hours or conditions of work 
may properly take them into account, we cannot accept the doctrine 
that women of mature age sui juris require or may be subjected to 
restrictions upon their liberty of contract which could not be law¬ 
fully imposed in the case of men under similar circumstances. To do 
so would be to ignore all the implications to be drawn from the present- 
day trend of legislation, as well as that of common thought and usage, 
by which woman is accorded emancipation from the old doctrine 
that she must be given special protection or be subjected to special 
restraint in her contractual and civil relationships. * 

The feature of this statute, which, perhaps more than any other, 
puts upon it the stamp of invalidity in that it exacts from the employer 
an arbitrary payment for a purpose and upon a basis having no casual 
connection with his business or the contract or the work the employee 
engages to do. The declared basis is not the value-of the service 
rendered, but the extraneous circumstances that the employee needs 
to get a prescribed sum of money to insure her subsistence, health, 
and morals. 

The ethical rights of every worker, man or woman, to a living 
wage may be conceded. One of the declared and important purposes 
of trade organizations is to secure it, and with that principle and with 
every legitimate effort to realize it in fact no one can quarrel, but 
the fallacy of the proposed method of obtaining it is that it assumes 
that every employer is bound to furnish it. 

Mr. Chief Justice Taft (dissenting): Legislatures in limiting 
freedom of contract between employee and employer by a minimum 
wage proceed on the assumption that employees, in the class receiving 
least pay, are not upon a full level of equality of choice with their 
employer and by their necessitous circumstances are prone to accept 
pretty much anything that is offered. They are peculiarly subject to 


PROTECTIVE LEGISLATION 869 

the overreaching of the harsh and greedy employer. The evils of 
the seating system and of the long hours and low wages which are 
characteristic of it are well known. Now I agree that it is a disputable 
question in the field of political economy how far a statutory require¬ 
ment of maximum hours or minimum wages may be a useful remedy 
for these evils, and whether it may not make the case of the oppressed 
employee worse than it was before. But it is not the function of this 
Court to hold congressional acts invalid simply because they are 
passed to carry out economic views which the court believes to be 
unwise or unsound. 

Without, however, expressing an opinion that a minimum-wage 
limitation can be enacted for adult men, it is enough to say that the 
case before us involves only the application of the minimum wage to 
women. If I am right in thinking that the legislature can find as 
much support in experience for the view that a sweating wage has 
as great and as direct a tendency to bring about an injury to the 
health and morals of workers, as for the view that long hours injure 
their health, then I respectfully submit that Muller v. Oregon , 208 
U.S. 412, controls this case. The law which was there sustained 
forbade the employment of any female in any mechanical establish¬ 
ment or factory or laundry for more than ten hours. This covered 
a pretty wide field in women’s work and it would not seem that any 
sound distinction between that case and this can be guilt up on the 
fact that the law before us applies to all occupations of women with 
power in the board to make certain exceptions. Mr. Justice Brewer, 
who spoke for the Court in Muller v. Oregon, based its conclusion on 
the natural limit to women’s physical strength and the likelihood that 
long hours would therefore injure her health, and we have had since 
a series of cases which may be said to have established a rule of 
decision. The cases covered restrictions in wide and varying fields 
of employment and in the later cases it will be found that the objection 
to the particular law was based not on the ground that it had general 
application but because it left out some employments. 

I am not sure from a reading of the opinion whether the Court 
thinks the authority of Muller v. Oregon is shaken by the adoption 
of the Nineteenth Amendment. The Nineteenth Amendment did 
not change the physical strength or limitations of women upon which 
the decision in Muller v. Oregon rests. The Amendment did give 
women political power and makes more certain that legislative 
provisions for their protection will be in accord with their interests 


870 THE WORKER IN MODERN ECONOMIC SOCIETY 


as they see them. But I don’t think we are warranted in varying 

constitutional construction based on physical differences between 
men and women, because of the Amendment. 

PROBLEMS 

1. What objections are commonly argued against the enactment of labor 
legislation ? 

2. What limitations are there upon the power of the national government 
to pass legislation affecting workers ? 

3. “The common law has been inadequate to provide for our evolving 
labor problems.” Why? Is the common law static? 

4. “A rapidly changing technology and a slowly evolving social control 
leave the worker exposed, threatened.” Discuss. 

5. What did the fifth and fourteenth amendments of the national constitu¬ 
tion aim to prevent ? 

6. ““What constitutes ‘unfair and arbitrary legislation’ is determined in 
each case by the court in terms of the prevailing social and economic 
standards of the times.” What does this statement mean ? 

7. Do judges record their own personal feeling as to the social desirability 
of legislation when they arrive at a decision ? How do they proceed ? 
How do you account for the fact that decisions are not always 
unanimous ? 

8. “The national constitution is the great barrier to adequate social 
actions.” “The national constitution safeguards American liberties.” 
Discuss. 

9. “We should forbid all children under 16 from working in manufacturing, 
trade and commerce.” Why, or why not ? 

10. “There is too much pampering of the modern child. When I was 
young I worked 10 hours a day and was the better for it.” Comment. 

11. Why should the state forbid the employment of children in street trades ? 
What are the functions of continuation schools ? 

12. “Children’s wages drag down men’s wages.” Why? 

13. What are the parents going to do when the state takes the earnings of 
the children away by prohibiting them from working ? 

14. Should child labor in agriculture be regulated ? If so, how ? 

15. What weaknesses exist in the administration of child labor legislation ? 

16. Would a national law forbidding child labor be desirable? Would it 
be constitutional? Is the problem of child labor a national problem? 

17. Suppose a state forbids the employment of children under eighteen years 
in mills and factories. Would such legislation be held constitutional ? 

18. Recently the President of the United States spoke favorably in behalf 
of a constitutional amendment making it possible for the national 
government to control the subject of child labor and employment. 
What arguments can be marshaled in behalf of such a suggestion ? 


PROTECTIVE LEGISLATION 


871 


19. A law provides that women shall not work at night more than eight 
hours. Another law provides that women shall not work during the day 
in any industry more than eight hours. Are not both of these laws 
invasions of the right of the women to contract freely and without 
interference ? 

20. “If any restrictions are placed upon woman’s right to work, she will 
not be able to secure the jobs that she otherwise could and hence her 
industrial opportunities will be hampered. All Feminists, therefore, 
should oppose labor legislation for women.” Discuss fully. 

21. What was the attitude of the Illinois Supreme Court in 1895 in the 
Ritchie case involving the constitutionality of the eight-hour law for 
women ? What was their attitude in 1909 on the ten-hour law ? How 
do you account for the change of position ? How did the court account 
for the change ? 

22. Explain the position of the United States Supreme Court in the case 
of the Oregon ten-hour law for women. 

23. An employee signed the following contract: “I agree in consideration 

of employment by said American Express Company, that I will assume 
all risks of accident or injury , . . (184 New York Reports 379). 

The court held the agreement invalid as opposed to public policy. 
Justify or criticize the decision. 

24. Why are courts slow to take cognizance of economic duress ? 

25. “It cannot be perceived how the cigar maker is to be improved in his 
health and morals by forcing him from his home and hallowed associa¬ 
tions and beneficent influences, to ply his trade elsewhere” (In re 
Jacobs). Do you agree ? Why, or why not ? 

26. “If it is proper to regulate the hours of labor for women, it is equally 
proper to regulate the hours for men.” “The two cases are entirely 
different; one has no bearing on the other.” Do you agree with either 
statement ? Explain. 

27. Explain the issue in the Lochner (bakeshop) case. Upon what grounds 
did the Supreme Court render its decision ? What was the objection 
of the dissenting minority ? 

28. In the case of Holden v. Hardy (Utah eight-hour law for mining), did 
the Supreme (*ourt place a broad or a narrow definition upon the police 
powers of the state ? Summarize its argument. 

29. On what grounds could hour legislation for men on railroads, for example, 
be justified which would not apply to all male workers ? 

30. Why have the leaders of the American Federation of Labor opposed hour 
legislation for men ? 

31. Upon what grounds that might appeal to the courts could a general 
ten-hour law for men be advocated? Would you personally approve 
of a general ten-hour law ? Of an eight-hour law ? 

32. Would you approve of a general one-day’s-rest-in-seven law, and if 
so, upon what grounds ? 


872 


THE WORKER IN MODERN ECONOMIC SOCIETY 


33. In Ives v. New York, the court in holding a workmen’s compensation act 
invalid says: “I also concede the plenary power of the Legislature to 
prescribe all reasonable rules for the conduct of the work which may 
conduce to the safety and health of persons employed therein .... 
[but] I know of no principle on which one can be compelled to indem¬ 
nify another for loss unless it is based upon contractual obligation or 
fault.” Reason with the court. 

34. Consider the remark of the New York Supreme Court in the foregoing 
case: “In a government like ours theories of public good or necessity 
are often so plausible or sound as to command public approval, but courts 
are not permitted to forget that law is the only chart by which the ship 
of state is to be guided.” 

Does this statement mean that the community acting through proper 
legislative channels cannot accomplish what it deems fit and proper? 
If not, what does it mean? 

35. It is said that a court does not make law; it finds the law. How does it 
proceed in finding the law ? 

36. “In considering the relationships of employer and employee it may be 
found necessary to protect individuals against their will.” Give con¬ 
crete meaning to this statement. Does the community protect citizens 
against their will in other relationships ? 

37. “The asserted right of the employer to be served by anyone who is 
willing to work for him, and at any wage the worker is willing to accept, 
must be subordinate to the right of the public to see that those women 
who are obliged to work for less than a living” (Concurring opinion of 
Mr. Justice Stafford, D. of C. Court of Appeals, January 6, 1921). 

' Criticize or defend this statement. 

38. Now that women have the right of suffrage, should they be considered 
any longer as wards of the state ? 

39. “The minimum wage interferes with the normal processes of economic 
distribution. In our competitive industrial society, if a woman receives 
low wages, this indicates that she is worth only low wages.” Do you 
agree ? Why, or why not ? 

40. “I am opposed to the minimum wage since it will raise prices to the 
consumer and he will lose what the workers gain. Better to let the 
workers labor at low wages and hence lower prices and make it possible 
for the poor to buy goods cheaply.” Comment. 

41. “The minimum wage would increase the efficiency of labor and cause 
more machinery to be used. It would mean no burden therefore upon 
the industry.” Comment. 

42. “For one state to pass a minimum wage law is sheer economic suicide 
if the other states do not do so.” Do you agree that this is true for 
manufacturing ? for restaurants ? for stores ? 


PROTECTIVE LEGISLATION 


873 


43. “What are you going to do with the women who cannot earn the mini¬ 
mum and are consequently thrown out of employment ? Is it not better 
for them to get low wages than to get none at all ?” 

44. The minimum wage laws of Australia and Great Britain apply to men as 
well as women. Do the American laws? AVhy? Should there be a 
legal minimum wage for men as well as for women? Defend your 
position. 

45. What is the difference between the Massachusetts and Oregon minimum 
wage laws ? Which type do you favor and why ? 

46. What is the difference between the commission laws and the flat-rate 
laws ? Describe the process of fixing wages under the commission plan. 

47. “It would be wrong to say that the principle of a living wage furnishes 
the sole guide to the commissions. The side that is the stronger bar¬ 
gainer is still likely to win.” What features of our commission plan of 
organization give rise to this criticism ? Have they any utility ? 

48. “Experience has demonstrated that a fixed minimum wage means, 
in the last analysis, a fixed wage; since the employer, being compelled 
to advance some workers to a wage higher than their earning capacity, 
will, to equalize the cost of operation, lower the wage of the more com¬ 
petent to the common basis” (Plaintiff’s brief, District of Columbia 
Minimum Wage Case, 1922). Discuss. 

49. (a) What change in the minimum wage policy did the new (1918) British 

Trade Board Act inaugurate ? ( b ) Are any of our American laws open 

to a similar interpretation ? (c) What are the recommendations of the 

British investigating committee? Do you agree with them? 


CHAPTER XXVIII 

THE COURTS AND ORGANIZED LABOR 
i. THE CLAYTON ACT AND ITS INTERPRETATION 

a) THE LABOR PROVISIONS OF THE CLAYTON ACT OF 1914 
AND THEIR JUDICIAL INTERPRETATION 1 

The outstanding provisions of the Clayton Act of 1914 are con¬ 
tained in sections 6 and 14. Sec. 6. That the labor of a human being 
is not a commodity or article of commerce. Nothing contained in the 
anti-trust laws shall be construed to forbid the existence and operation 
of labor, agricultural or horticultural organizations, instituted for the 
purposes of mutual help and not having capital stock or conducted 
for profit, or to forbid or to restrain individual members of such 
organizations from lawfully carrying out the legitimate objects thereof; 
nor shall such organizations or the members thereof be held or con¬ 
strued to be illegal combinations or conspiracies in restraint of trade, 
under the anti-trust laws. 

Sec. 20. That no restraining order or injunction shall be granted 
by any court of the United States, or a judge or the judges thereof in 
any case between an employer and employees or between employers 
and employees, or between employees or between persons employed 
and persons seeking employment, involving or growing out of a dispute 
concerning terms and conditions of employment, unless necessary to 
prevent irreparable injury to property or to a property right of the 
party making the application for which injury there is no adequate 
remedy at law and such property or property right must be described 
with particularity in the application which must be in writing and 
sworn to by the applicant or by his agent or attorney. 

And no such restraining order or injunction shall prohibit any 
person or persons, whether singly or in concert from terminating 
any relation of employment or from ceasing to perform any work or 
labor, or from recommending, advising or persuading others by peace¬ 
ful means so to do; or from attending at any place where any such 
person or persons may lawfully be, for the purpose of peacefully 

1 Adapted with permission from Royal E. Montgomery, “The Clayton Law 
Labor Provisions and the Supreme Court,” University Journal of Business 
(February, 1923), pp. 1-32. 


874 


THE COURTS AND ORGANIZED LABOR 


875 


obtaining or communicating information, or from peacefully persuad¬ 
ing any person to work or abstain from working; or from ceasing to 
patronize or employ any party to such dispute, or from recommending, 
advising or persuading others by peaceful means so to do; or from 
paying or giving to or withholding from any person engaged in such 
dispute, any strike benefits or other moneys or things of value; or 
from peaceably assembling in a lawful manner and for lawful purposes; 
or from doing any act or thing which might lawfully be done in the 
absence of such dispute by any party thereto; nor shall any of the 
acts specified in this paragraph be considered or held to be violations 
of any law of the United States. 

In its interpretation of the act the following principles have been 
established by the Supreme Court: (1) unions are not exempt from 
anti-trust law for any acts that in themselves constitute violation of 
these laws; (2) Section 20, prohibiting the issuance of the injunction 
in labor disputes, does not hold if it is found that injury to an 
employer’s business is resulting from the dispute, for business is 
property and hence the injunction can be issued under the authoriza¬ 
tion of the qualification: “unless necessary to prevent immediate and 
irreparable injury to a property right”; (3) the employer has a prop¬ 
erty right, also, in contracts with his employees concerning their 
affiliation or non-affiliation with unions, and to carry out an organiz¬ 
ing campaign among workers so bound is neither “lawful” action nor 
the carrying out of a “legitimate” object; (4) the Clayton law estab¬ 
lished no new principle in equity, and picketing and boycotting must 
be done in a lawful manner for a legitimate object with the terms carry¬ 
ing no new denotation as a result of the 1914 legislation; (5) there is 
in fact no peaceful picketing except that of the lone missionaries 
stationed at the points of ingress and egress; (6) the provisions of 
Section 20 permitting those persons having a direct interest in the 
controversy peacefully and lawfully to communicate with and 
endeavor to persuade others applies only to those persons having a 
direct interest in the controversy—employees, ex-employees, pros¬ 
pective employees—and not to their supporters and sympathizers; 
(7) the secondary boycott is unlawful and the doctrine established in 
the Hatters case still stands; and (8) a union is liable under the Sher¬ 
man law for restraint of commerce when the intent so to do is proved 
(even though it was not proved in the Coronado case), it is answerable 
in the federal courts for any unlawful activities accompanying its 
strikes, and it may be sued in the federal courts in its collective name. 


876 


THE WORKER IN MODERN ECONOMIC SOCIETY 


It will be remembered that the declaration, “ Labor is not a com¬ 
modity,” was hailed as the greatest victory for unionism in the history 
of the American labor movement. Well, nothing in the court decisions 
declares that labor is a commodity. This much of the Clayton -law 
remains—safe, unchanged, untarnished. But for that matter, there 
never has been a decision in which an American court has held that 
the labor of a human being is an article of commerce. 

In its fundamentals, the law of labor was little changed by the 
Clayton act of 1914. 

b) SECONDARY BOYCOTT UNDER THE CLAYTON ACT—DUPLEX 
PRINTING PRESS COMPANY V. DEERING 1 

[Note: For the purpose of compelling a manufacturer of printing 
presses to unionize its factory in Michigan and to enforce there the 
“closed shop,” the eight-hour day and the union scale of wages, organi¬ 
zations of machinists with headquarters in New York City and a large 
organization of national scope with which they were affiliated, entered 
into a combination to interfere with and restrain the manufacturer’s 
interstate trade; in pursuance of which this manufacturer’s customers 
were warned not to purchase or install its presses, a trucking company 
usually employed by customers was notified not to haul them; 
employees of the trucking company and of the customers were incited 
to strike in order to prevent both hauling and .installation, repair 
shops were notified not to repair them, etc.— Ed.] 

The opinion of the court: Pitney, J .—The complainant’s business 
is a property right entitled to protection against unlawful injury or 
interference. There is nothing in the section (section 6) of the 
Clayton Act to exempt such an organization when it departs from its 
normal and legitimate objects. Nor can section 20 be regarded as 
bringing in all members of a labor organization as parties to “ a dispute 
concerning terms or conditions of employment” which proximately 
affects only a few of them. To instigate a sympathetic strike in aid 
of a secondary boycott cannot be termed “peaceful and lawful” 
persuasion. In essence, it is a threat to inflict damage upon the 
immediate employer, between whom and his employees no dispute 
exists, in order to bring him against his will into a concerted plan to 
inflict damage upon another employer who is in dispute with his 
employees. 

There should be an injunction against the defendants. 

1 254 U.S. 443. 


THE COURTS AND ORGANIZED LABOR 877 

Dissenting opinion: Brandeis, J .—Defendants contend that the 
Duplex Company’s refusal to deal with the machinists’ union and to 
observe its standards threatened the interest not only of such union 
members as were its factory employees but even more of all members 
of the affiliated unions whose more advanced standards the plaintiff 
was in reality attacking. I should say that the defendants and 
those from whom they have sought co-operation have a common 
interest which the plaintiff threatened. 

Second, this statute (the Clayton Act) was the fruit of unceasing 
agitation, which extended over more than twenty years and was 
designed to equalize before the law the position of working men and 
employer as industrial combatants. By 1914 the ideas of the advocates 
of legislation had fairly crystallized upon the manner in which the 
inequality and uncertainty of the law should be removed. The 
resulting law set out certain acts which previously had been held 
unlawful whenever the courts disapproved of the ends for which 
they were performed. It then declared that when these acts were 
committed in the course of an industrial dispute, they should not be 
held to violate any law of the United States. In other words the 
Clayton Act substituted the opinion of Congress as to the propriety 
of the purpose for that of differing judges and therefore it declared 
that the relations between employers of labor and working men were 
competitive relations, that organized competition was not harmful 
and that it justified injuries necessarily inflicted in its course. 

2. RECOGNITION OF UNIONISM 1 

[Note: In error to the Supreme Court of the State of Kansas to 
review a judgment which affirmed a conviction in the District Court 
under an information charging a violation of a statute of the state for¬ 
bidding employers to exact a promise not to join or retain membership 
in a labor organization as a condition of securing or retaining employ¬ 
ment.— Ed.] 

Mr. Justice Pitney: About July 1, 1911, one Hedges was 
employed as a switchman by the St. Louis & San Francisco Railway 
Company and was a member of a labor organization called the Switch¬ 
men’s Union of North America. Plaintiff in error was employed by 
the railway company as superintendent, and as such he requested 
Hedges to sign an agreement, which he presented to him in writing, 

1 Cop page v. Kansas , 35 Supreme Ct. Rep. 240. 


\ 


878 THE WORKER IN MODERN ECONOMIC SOCIETY 

at the same time informing him that if he did not sign it he could not 
remain in the employ of the company. The following is a copy of the 
paper thus presented: 

Fort Scott, Kansas,_1911 

Mr. T. B. Cop page, Superintendent Frisco Lines 
Fort Scott 

We, the undersigned, have agreed to abide by your request, that is, to 
withdraw from the Switchmen’s Union, while in the service of the Frisco 
Company. 

{Signed) _ 

Hedges refused to sign this, and refused to withdraw from the labor 
organization. Thereupon plaintiff in error, as such superintendent, 
discharged him from the service of the company. 

We have to deal, therefore, with a statute that, as construed and 
applied, makes it a criminal offense, punishable with fine or imprison¬ 
ment, for an employer or his agent to merely prescribe, as a condition 
upon which one may secure certain employment or remain in such 
employment (the employment being terminable at will), that the 
employee shall enter into an agreement not to become or remain a 
member of any labor organization while so employed; the employee 
being subject to no incapacity or disability, but, on the contrary, 
free to exercise a voluntary choice. 

Granted the equal freedom of both parties to the contract of 
employment, has not each party the right to stipulate upon what 
terms only he will consent to the inception, or to the continuance, of 
that relationship ? And may he not insist upon an express agreement, 
instead of leaving the terms of the employment to be implied? 
Approaching the matter from a somewhat different standpoint, is the 
employee’s right to be free to join a labor union any more sacred, or 
more securely founded upon the Constitution, than his right to work 
for whom he will, or to be idle if he will ? And does not the ordinary 
contract of employment include x an insistence by the employer that 
the employee shall agree, as a condition of the employment, that he 
will work for whom he pleases, but will serve his present employer, and 
him only, so long as the relation between them shall continue ? Can 
the right of making contracts be enjoyed at all, except by parties com¬ 
ing together in an agreement that requires each party to forego, during 
the time and for the purpose covered by the agreement, any incon¬ 
sistent exercise of his constitutional rights? These queries answer 
themselves. 




THE COURTS AND ORGANIZED LABOR 


879 


Of course we do not intend to say, nor to intimate, anything 
inconsistent with the right of individuals to join labor unions, nor do 
we question the legitimacy of such organizations so long as they con¬ 
form to the laws of the land as others are required to do. Conceding 
the full right of the individual to join the union, he has no inherent 
right to do this and still remain in the employ of one who is unwilling 
to employ a union man, any more than the same individual has a 
right to join the union without the consent of that organization. Can 
it be doubted that a labor organization—a voluntary association of 
working men—has the inherent apd constitutional right to deny mem¬ 
bership to any man who will not agree that during such membership 
he will not accept or retain employment in company with nonunion 
men? Or that a union man has the constitutional right to decline 
proffered employment unless the employer will agree not to employ 
any nonunion man ? And can there be one rule of liberty for the labor 
organization and its members, and a different and more restrictive 
rule for employers ? We think not; and since the relation of employer 
and employee is a voluntary relation, as clearly as is that between 
the members of a labor organization, the employer has the same 
inherent right to prescribe the terms upon which he will consent to the 
relationship, and to have them fairly understood and expressed in 
advance. 

When a man is called upon to agree not to become or remain a 
member of the union while working for a particular employer he is in 
effect only asked to deal openly and frankly with his employer, so as 
not to retain the employment upon terms to which the latter is not 
willing to agree. And the liberty of making contracts does not include 
a liberty to procure employment from an unwilling employer, or with¬ 
out a fair understanding. Nor may the employer be foreclosed by 
legislation from exercising the same freedom of choice that is the right 
of the employee. 

3. LEGAL LIABILITY OF UNINCORPORATED UNIONS 1 

[Note : The plaintiff companies owned adjacent mines in Sebastian 
County, Arkansas, the mines being operated under a common manage¬ 
ment which had a contract with District No. 21 of the United Mine 
Workers of America. About three months before the expiration of 
this contract, Bache, the receiver for the companies, shut down the 

1 United Mine Workers of America; et al, v. The Coronado Coal Company , et al., 
Supreme Court of United States, 259 U.S. 344 * 


88o 


THE WORKER IN MODERN ECONOMIC SOCIETY 


mines and reopened shortly afterward on an open-shop basis. A strike 
was called at once and both sides embarked upon a period of industrial 
warfare which culminated on July 17, 1914, in an armed attack upon 
mines, during the course of which two employees were deliberately 
murdered and the mines either blown up or fired. The companies 
brought suit under the Sherman Act, alleging a conspiracy in restraint 
of interstate commerce and asking treble damages under Section 7. 
They joined as party defendants the United Mine Workers of America, 
District No. 21, together with sixtv-five individuals. The Unions are 
unincorporated voluntary associations.-— Ed.] 

Mr. Chief Justice Taft: Undoubtedly at common law an unin¬ 
corporated association of persons was not recognized as having any 
other character than a partnership in whatever was done, and it could 
only sue or be sued in the names of its members, and their liability 
had to be enforced against each member. 

But the growth and necessities of these great labor organizations 
have brought affirmative legal recognition of their existence and use¬ 
fulness and provisions for their protection, which their members have 
found necessary. Their right to maintain strikes, when they do not 
violate law or the rights of others, has been declared. The embezzle¬ 
ment of funds by their officers has been especially denounced as a 
crime, the so-called union label, which is a quasi trademark to indicate 
the origin of manufactured products in union labor, has been protected 
against pirating and deceptive use by the statutes of most of the states, 
and in many states authority to sue to enjoin its use has been conferred 
on unions. 

They have been given distinct and separate representation and the 
right to appear to represent union interests in statutory arbitrations, 
and before official labor boards. 

More than this, equitable procedure adapting itself to modern 
needs has grown to recognize the need of representation by one person 
of many too numerous to sue or to be sued; and this has had its influ¬ 
ence upon the law side of litigation, so that out of the very necessities 
of existing conditions and the utter impossibility of doing justice 
otherwise, the suable character of such an organization as this has 
come to be recognized in some jurisdictions and many suits for and 
against labor unions are reported in which no question has been raised 
as to the right to treat them in their closely united action and functions 
as artificial persons capable of suing and being sued. 

It would be unfortunate if an organization with as great power as 
this international union has in the raising of large funds and in direct- 


THE COURTS AND ORGANIZED LABOR 


881 


ing the conduct of 400,000 members in carrying on, in a wide territory, 
industrial controversies and strikes, out of which so much unlawful 
injury to private rights is possible, could assemble its assets to be used 
therein free from liability for injuries by torts committed in course 
of such strikes. To remand persons injured to a suit against each of 
the 400,000 members to recover damages and to levy on his share of 
the strike fund would be to leave them remediless. 

Our conclusion as to the suability of the defendants is confirmed 
in the case at bar by the words of Sections 7 and 8 of the anti-trust 
law. The persons who may be used under Section 7 include “ corpora¬ 
tions and associations existing under or authorized by the laws of 
either the United States, or the laws of any of the territories, the laws 
of any state, the laws of any foreign country.” 

This language is very broad, and the words given their natural 
signification certainly include labor unions like these. They are, as 
has been abundantly shown, associations existing under the laws of 
the United States, of the territories thereof, and of the states of the 
union. Congress was passing drastic legislation to remedy a threaten¬ 
ing danger to the public welfare, and did not intend that any person 
or combinations of persons should escape its application. Their 
thought was especially directed against business associations and 
combinations that were unincorporated to do the things forbidden by 
the act, but they used language broad enough to include all associations 
which might violate its provisions organized by the statutes of the 
United States or the stated or the territories, or foreign countries as 
lawfully existing; and this, of course, includes labor unions, as the 
legislation referred to shows. 

For these reasons we conclude that the international union, the 
district No. 21 and the twenty-seven local unions were properly made 
parties defendant here and properly served by process on their princi¬ 
pal officers. 

[Note: The employer has resorted commonly to the injunction as 
his most powerful weapon against labor. For damages suffered, action 
lay only against the individual wrongdoers or their principals. The 
practical difficulty of identifying and serving so large a group, and the 
lack of financial responsibility in many cases, makes this a remedy of 
questionable value. 

Whether we permit the employer as indicated in this case the right 
to sue an unincorporated union as an entity is a matter of policy. 
Certainly it is a question whether we should foster within society large 
and powerful groups enjoying the privileges arising out of collective 


882 


THE WORKER IN MODERN ECONOMIC SOCIETY 


action and yet escape liability. But in the present state with uncer¬ 
tainty and illegality curbing labor’s methods to hold that unincor¬ 
porated unions can be sued as unions may well tend to further the 
exploitation of the economically weaker individual, the worker. 

Even if we deny that such a policy of immunity is a wise one, we are 
confronted with the further question as to the wisdom of judicial 
determination of a policy of such importance, independently of an 
expression of public opinion through the legislature. 

In England public policy against such collective liability has been 
expressed in the Trade Disputes Act of 1906, which provides that trade 
unions as such shall not be subject to suits for damages arising out of 
torts. This statute was passed following the decision in the famous 
Tajf Vale case in which the court held labor unions suable as entities 
under the Trade Union Act of 1871.— Ed.] 

4. STATUS OF ORGANIZING ACTIVITIES 1 

[Note: The Hitchman Coal Company after experiencing several 
costly strikes decided to run its mines non-union. Workers seeking 
employment were required to agree not to join a union and if they did 
to withdraw from the company’s employ. The United Mine Workers 
sent in several organizers “to enroll all employees who are willing 
to join a union if it is organized.” Other facts will appear in the 
court’s decision.— Ed.] 

Mr. Justice Pitney: What are the legal consequences of the 
facts that have been detailed ? 

That the plaintiff was acting within its lawful rights in employing 
its men only upon terms of continuing membership in the United Mine 
Workers of America is not open to question. The same liberty which 
enables men to form unions, and through the union to enter into 
agreements with employers willing to agree, entitles other men to 
remain independent of the union and other employers to agree with 
them to employ no man who owes any allegiance or obligation to the 
union. 

Plaintiff, having in the exercise of its undoubted rights established 
a working agreement between it and its employees, with the free assent 
of the latter, is entitled to be protected in the enjoyment of the result¬ 
ing status, as in any other legal right. That the employment 
was “at will,” and terminable by either party at any time, is of no 
consequence. 

1 Hitchman Coal and Coke Company v. Mitchell, 202 Fed. 512 (1912). 


THE COURTS AND ORGANIZED LABOR 


883 


In short, plaintiff was and is entitled to the good will of its em¬ 
ployees, precisely as a merchant is entitled to the good will of his cus¬ 
tomers although they are under no obligation to continue to deal with 
him. The value of the relation lies in the reasonable probability that 
by properly treating its employees, and paying them fair wages, and 
avoiding reasonable grounds of complaint, it will be able to retain them 
in its employ, and to fill vacancies occurring from time to time by the 
employment of other men on the same terms. The pecuniary value 
of such reasonable probabilities is incalculably great, and is recognized 
by the law in a variety of relations. 

Mr. Justice Brandeis, dissenting: It is urged that a union agree¬ 
ment curtails the liberty of the operator. Every agreement curtails 
the liberty of those who enter into it. The test of legality is not 
whether an agreement curtails liberty, but whether the parties have 
agreed upon some thing which the law prohibits or declares otherwise 
to be inconsistent with the public welfare. The operator by the union 
agreement binds himself: (1) to employ only members of the union; 
(2) to negotiate with union officers instead of with employees individ¬ 
ually the scale of wages and the hours of work; (3) to treat with the 
duly constituted representatives of the union to settle disputes con¬ 
cerning the discharge of men and other controversies arising out of the 
employment. These are the chief features of a “ unionizing ” by which 
the employer’s liberty is curtailed. Each of them is legal. To obtain 
any of them or all of them, men may lawfully strive and even strike. 
And, if the union may legally strike to obtain each of the things for 
which the agreement provides, why may it not strike or use equivalent 
economic pressure to secure an agreement to provide them ? 

It is also urged that defendants are seeking to “coerce” plaintiff to 
“unionize” its mine. But coercion, in a legal sense, is not exerted 
when a union merely endeavors to induce employees to join a union 
with the intention thereafter to order a strike unless the employer 
consents to unionize his shop. Such pressure is not coercion in a legal 
sense. The employer is free either to accept the agreement or the. 
disadvantage. Indeed, the plaintiff’s whole case is rested upon agree¬ 
ments secured under similar pressure of economic necessity or dis¬ 
advantage. If it is coercion to threaten to strike unless plaintiff 
consents to a closed union shop, it is coercion also to threaten not to 
give one employment unless the applicant will consent to a closed 
non-union shop. The employer may sign the union agreement for 
fear that labor may not be otherwise obtainable; the workman may 


884 


THE WORKER IN MODERN ECONOMIC SOCIETY 


sign the individual agreement for fear that employment may not be 
otherwise obtainable. But such fear does not imply coercion in a 
legal sense. 

In other words an employer, in order to effectuate the closing of his 
shop to union labor, may exact an agreement to that effect from his 
employees. The agreement itself being a lawful one, the employer 
may withhold from the men an economic need—employment—until 
they assent to make it. Likewise an agreement closing a shop to 
non-union labor being lawful, the union may withhold from an 
employer an economic need—labor—until he assents to make it. In 
a legal sense an agreement entered into, under such circumstances is 
voluntarily entered into; and as the agreement is in itself legal, no 
reason appears why the general rule that a legal end may be pursued 
by legal means should not be applied. Or, putting it in other words, 
there is nothing in the character of the agreement which should make 
unlawful means used to attain it, which in other connections are 
recognized as lawful. 

There was no attempt to induce employees to violate their contracts .— 
The contract created an employment at will; and the employee was 
free to leave at any time. The contract did not bind the employee 
not to join the union; and he was free to join it at any time. The 
contract merely bound him to withdraw from plaintiff’s employ, if he 
joined the union. There is evidence of an attempt to induce plaintiff’s 
employees to agree to join the union; but none whatever of any 
attempt to induce them to violate their contract. Until an employee 
actually joined the union he was not, under the contract, called upon 
to leave plaintiff’s employ. There consequently would be no breach 
of contract until the employee both joined the union and failed to 
withdraw from plaintiff’s employ. There was no evidence that an 
employee was persuaded to do that or that such a course was con¬ 
templated. What perhaps was intended was to secure agreements or 
assurances from individual employees that they would join the union 
• when a large number of them should have consented to do so; with 
the purpose, when such time arrived, to have them join the union 
together and strike—unless plaintiff consented to unionize the mine. 
Such a course would have been clearly permissible under the contract. 

The purpose of interfering was confessedly in order to strengthen 
the union, in the belief that thereby the condition of workmen engaged 
in mining would be improved; the bargaining power of the individual 
workingman was to be strengthened by collective bargaining; and 
collective bargaining was to be ensured by obtaining the union agree- 



THE COURTS AND ORGANIZED LABOR 


885. 

ment. It should not, at this day, be doubted that to induce working¬ 
men to leave or not to enter an employment in order to advance such 
a purpose is justifiable when the work-men are not bound by contract 
to remain in such employment. 

5. THE STRIKE AS A WEAPON 
See chapter xx, Selection 4. 

PROBLEMS 

1. The Clayton law declares that labor is not a commodity. What differ¬ 
ence does this provision make to the law existing at the time of the 
passage of the Clayton Act ? 

2. “The passage of the Clayton Act marks the biggest step taken since 
slavery and serfdom.” “The Clayton Act is a gold brick for the working 
man.” Discuss. 

3. Under the Clayton Act picketing, strike benefits, boycotting,-and advis¬ 
ing others to cease to patronize are lawful if carried out by peaceful and 
lawful means. What are “lawful means”? What changes are made 
in the law as it existed before the passage of the Clayton Act ? 

4. Under the interpretations placed upon the Clayton Act by the majori¬ 
ties of the Supreme Court, what is the existing status of the law con¬ 
cerning labor organizations with regard to ( a) exemption from the 
operation of the Sherman Anti-trust law, ( b ) protection from the indis¬ 
criminate use of the injunction, ( c ) freedom to organize workers, (d) 
picketing, ( e ) boycotting? 

5. Describe the present status of the law with regard to boycotting. 

6. The state of X has a law forbidding the issuance of injunctions in labor 
disputes to prevent picketing, and advertising the fact that a strike 

' exists. Employer A applies for an injunction, alleging conspiracy 
to injure his business through picketing. It is denied. He carries his 
case to the Supreme Court of the United States on the ground that 
the statute is unconstitutional. Decision? Give reasons. 

7. In a prominent case the court speaking of picketing says: “In going 
to and from work, men have a right to as free a passage as the streets 
afford, consistent with the rights of others to enjoy the same privilege. 
We are a social people, and the accosting by one of another in an inoffen¬ 
sive way and an offer by one to communicate and discuss information 
with a view to influencing the other’s action are not regarded as aggres¬ 
sion or a violation of the other’s property right. If, however, the offer 
is declined, as it may rightfully be, then persistence, importunity, follow¬ 
ing and dogging become unjustifiable annoyance and obstruction which 
is likely soon to savor of intimidation.” 

Do you agree with the conclusion of the court ? Should workers 
be allowed to intimidate through the use of picketing? What should 
they be allowed to do once a strike is started ? 


.886 


THE WORKER IN MODERN ECONOMIC SOCIETY 


8. Give the facts in Coppage v. Kansas and the court’s decision. 

9. Why should a state pass such an act making it unlawful to require as 
a condition of employment that a man not join a labor union? Is 
such an act founded upon a sound policy? Is it the business of the 
courts to inquire whether or not it is based upon a sound policy ? What 
is the court supposed to do ? 

10. “Can there be one rule of liberty for the labor organizations and its 
members and a different and more restrictive rule for employers?” 
{Coppage v. Kansas .) Reason with the court. 

11. Recite the facts in the case of the United Mine Workers of America v. 
The Coronado Coal Company. What was the decision relative to the 
liability of unincorporated unions to suit for acts which cause damage ? 

12. Before the decision in the Coronado case some people thought that 
action for damages suffered could be maintained only against the indi¬ 
vidual wrongdoers or their principals. What was the practical diffi¬ 
culty in recovering under such conditions for damage done during strikes ? 

13. The issue in the Coronado case was one not for a court but for the public 
to decide. We cannot afford to have a policy of such importance 
determined by the judiciary.” Discuss. 

14. “To hold in the present state of uncertainty and illegality curbing 
labor’s methods that unincorporated unions can be sued as unions may 
well tend to further the exploitation of the economically weaker indi¬ 
vidual, the worker.” Discuss. Is this necessarily an argument against 
the decision in the Coronado case ? What does it suggest ? What is 
the law in England as expressed in the Trades Disputes Act of 1906? 
How did the law come to be passed ? 

15. Recite the facts and the decision in the case of Hitchman Coal and Coke 
Company v. Mitchell. On what grounds does Mr. Justice Brandeis 
dissent from the majority opinion ? 

16. “If the holding in the Hitchman case be sound, then unionism is balked.” 
Why or why not ? 

17. “Such cases as Coppage v. Kansas and Hitchman Coal and Coke Company 
v. Mitchell demonstrate that labor cannot stay out of politics.” Discuss. 

18. Compare the reasoning of Mr. Justice Pitney in the Coppage and 
Hitchman cases. 

19. What determines whether or not a strike is legal ? Cite illustrations. 

20 “The trend of court decisions demonstrates how futile are the tactics 

of unionism.” Discuss. 

21. “What labor needs is a series of methods which do not inevitably align 
the public against it.” Discuss. 

22. If labor is to secure its objectives what methods and devices should it 
seek to develop ? 

23. “Law lies in the last analysis in the assent of the community. When 
the courts act they are but giving sanction to the wishes of society.” 
Discuss. 


CHAPTER XXIX 

METHODS OF SECURING INDUSTRIAL PEACE 
i. COMPULSORY ARBITRATION 

a) COMPULSORY ARBITRATION IN AUSTRALASIA 1 

Compulsory arbitration in one form or another exists in New 
Zealand and in all the Australian states except Victoria and Tasmania, 2 
which regulate the relation between employers and employees by means 
of wages boards. No state having adopted it has seen fit to abandon 
it and all the earlier states to enact compulsory arbitration laws have, 
within recent years, revised their laws in the direction of making them 
more comprehensive. 

In spite of the fact that most people who talk of the Australian 
method of dealing with industrial disputes place emphasis upon the 
feature of compulsion, all the states having arbitration courts endeavor 
to make the fullest possible use of either mediation or conciliation, and 
sometimes of both, before referring disputes to the court. 

In New Zealand and in New South Wales there are conciliation 
commissioners, who on receiving notice that an industrial dispute has 
arisen, proceed at once to the scene and endeavor to secure a voluntary 
agreement between the parties. If they fail in this, the commissioner 
has the authority to summon the parties to attend a conference. 
The disputants need not wait, however, for the commissioner to take 
cognizance of the dispute. Either of them may make application. 3 

The success of the New Zealand conciliation councils in settling 
disputes is shown by the statement that from January i, 1909, when 
they began their work, to March 31, 1915, the councils had dealt with 
694 disputes. Of this number 466, or approximately two-thirds, were 
fully settled in council, 130 more had been substantially settled there, 
with only a few points on which an agreement had not been reached 

1 Taken with permission from M. B. Hammond, in Proceedings of the Academy 
of Political Science, VII (January, 1918), 19-30. 

2 Since this was written Compulsory Arbitration has been provided for in 
certain matters in Tasmania. 

3 In order to bring disputes before the court employers and employees must 
be organized in associations or unions. 


887 


888 


THE WORKER IN MODERN ECONOMIC SOCIETY 


to be referred to the court, while in only 98 cases, or about one-seventh 
of the total number, was it impossible to settle the main difficulties and 
the whole dispute had to be referred to the court. It would, however, 
be a great mistake to conclude that this happy experience which New 
Zealand has had with conciliation shows that the arbitration courts 
were not needed. The truth of the matter is that the one great reason 
why the conciliation commissioners have been able to secure so many 
voluntary agreements from the disputants is that these disputants 
realized that unless they did reach an agreement, the dispute would go 
automatically to the arbitration court for settlement. Experience 
everywhere shows that the parties to a dispute prefer to settle their 
own differences rather than to have the intervention of a third party. 

In all the Australasian states having the system of compulsory 
arbitration, the voluntary industrial agreements made by employers 
and employed are given full recognition in law and, when registered, 
have the same binding force as do the awards of the courts. 

When both mediation and conciliation have failed to secure a 
voluntary agreement between disputants, the industrial dispute goes 
to the arbitration court for the making of an award which is made 
binding on both parties. In every state the arbitration court is pre¬ 
sided over by a judge of the highest court. 

In all the arbitration courts the effort is made to simplify the pro¬ 
ceedings before the court. The judge himself always takes an active 
part in the proceedings, questioning closely the witnesses in regard to 
matters in which he is in doubt, and which appear irrelevant. 

The final award of the court covers all the matters in controversy 
and binds not only the parties to the original dispute but all other 
employers and employees in that industry within the area designated. 
Frequently the award covers the entire state. To make an award 
which fixes the wages to be paid, the hours to be worked and many 
other conditions of employment, binding on certain employers in the 
industry and not on their competitors, would give the latter great 
advantages. The attempt is made to deal justly with all by giving to 
all persons likely to be affected by an award an opportunity to present 
their claims and objections at the time the case is heard. 

The awards of the arbitration courts have resulted in the most com¬ 
plete system of industrial regulation which the modern world had ever 
known prior to the outbreak of the present war. For an arbitration 
court to prevent strikes, its authority must be sufficient to enable it to 
deal with all those matters which may be made the subject of an indus- 


METHODS OF SECURING INDUSTRIAL PEACE 889 

trial dispute. E rom the New Zealand awards alone I have compiled a 
list of not less than seventy separate subjects. Some of the matters 
such as the right of the workers to demand the discharge of a cook, or 
the obligation of the employer to give the men an opportunity 'to 
smoke, may seem of trivial importance, but if they are regarded by 
the parties themselves as of sufficient importance to lead to a strike, 
there is no alternative for the court. It must decide the matter. 

The most important matters which have been dealt with are: 

1. In all industries and trades in which awards have been made 
(and they include all the important industries and occupations except 
agriculture and domestic servants) the lowest grades of workers have 
obtained a living wage which has slowly and steadily been raised by 
the courts as the cost of living has increased. 

2. Skilled workers have obtained a minimum wage in their respec¬ 
tive trades in excess of that paid to the unskilled workers. This has 
been intended to compensate the lowest grade of skilled workers and 
to take into consideration the degree of regularity of employment. 
No attempt is usually made to fix the actual wages paid to those having 
superior skill or attainments. 

3. The eight-hour day has been established in practically all 
industries which are not required by the nature of the occupation to 
continue operations for a longer period. In many occupations the 
hours of work have been fixed by the court at 44 or 45 per week. 

4. In all those trades in which the workers are strongly organized— 
and they now include all the most important occupations—trade union¬ 
ists have been given the preference in employment over other workers. 
This grant of preference has been accompanied by the provision that 
it shall continue to operate only as long as the union is open to any 
workers possessing the requisite skill and agreeing to pay the very 
moderate entrance fees and monthly or weekly dues which the court 
prescribes. Preference to unionists will seem to some in my audience 
an extraordinary action on the part of a court which is supposed to 
respect the rights of all workers, non-unionists as well as others, but 
the system of compulsory arbitration requires that collective bargain¬ 
ing be considered as the normal and usual method of making industrial 
contracts. 

5. Other important matters covered by the courts’ awards are the 
number and proportion of apprentices who may be employed, the 
amount of overtime which may be worked and the rate of pay for such 
overtime, the number of holidays and when they are to occur, hours 


890 THE WORKER IN MODERN ECONOMIC SOCIETY 


for meal-time, the character of board and accommodations to be 
furnished men not living at home, preference of employment to be 
accorded to workers already employed when new machinery is intro¬ 
duced, seniority in promotion, etc. 

To workers generally the system of compulsory arbitration tends 
to guarantee a-fairly high level of earnings and moderately good work¬ 
ing conditions, which may not be so good as strongly organized bodies 
of workers could obtain without the support of the law but which are 
better than most laborers would obtain without some scheme of indus¬ 
trial regulation. Personally, I am not convinced that these wages and 
working conditions are better in the arbitration states than in the 
State of Victoria, which regulates wages and hours by means of wages 
boards and does not undertake to prohibit strikes. But if I had to 
choose between compulsory arbitration and the industrial anarchy 
which exists in many places in this country I should unquestionably 
prefer compulsory arbitration, because I should know that the lowest 
grades of workers could obtain by it comfortable working conditions 
and at least subsistence wages. 

In spite of the failure of the compulsory arbitration laws entirely 
to prevent strikes, New Zealand has certainly had remarkable success 
in reducing strikes under her law. The results attained by the 
Australian Commonwealth Arbitration Act have been even more 
remarkable. 1 

b) THE AUSTRALIAN FEDERAL ARBITRATION ACT 
Constitution of the Federal Court 2 

The Australian Federal Constitution of 1900 gave to the Federal 
Parliament power to make laws with respect to “conciliation and 
arbitration for the prevention and settlement of industrial disputes 
extending beyond the limits of any one State.” In pursuance of this 
power, an Act was passed in 1904, constituting a Court for Concilia¬ 
tion, and where conciliation is found impracticable, arbitration. The 
arbitration is compulsory in the sense that an award, if made, binds the 
parties. The Act makes a strike or a lockout an offence if the dispute 
is within the limits of one State. 

1 In New South Wales, however, there have been an enormous number of 
strikes. 

2 Adapted with permission from Henry Bourne Higgins, “A New Province 
for Law and Order,” Harvard Law Review (November, 1915), pp. 13-14, 23, 33-35. 


METHODS OF SECURING INDUSTRIAL PEACE 


891 

Under the Act, the Court consists of a President, who must be one 
of the justices of the High Court of Australia. The High Court is 
modelled on the Supreme Court of the United States. 

The system of arbitration adopted by the Act is based on unionism. 
No party can file a complaint for the settlement of a dispute except an 
“ organization,” that is to say, a union of employers or of employees 
registered under the Act. One of the “chief objects” of the Act, as 
stated in Sec. 2, is “to facilitate and encourage the organization of 
representative bodies of employers and of employees and the sub¬ 
mission of industrial disputes to the Court by organizations.” 

This article is confined to the Federal Court of Conciliation. But 
American readers should know that in each of the six Australian States 
there is some wages board system under the State law or some industrial 
or arbitration Court. There is no organic connection between the 
State systems and the Federal system. The object of the wages boards 
is primarily to prevent sweating or under-payment; the object of the 
Federal Court is to preserve or restore industrial peace. The Federal 
Court deals with disputes, as such, and prescribes wages, etc., merely 
as incidental to the prevention or settlement of disputes; the wages 
board prescribes minimum wages and has no direct relation to disputes. 
But, as is obvious from the nature of the case, the systems often over¬ 
lap. The wages boards cannot deal with all industrial conditions; 
the Federal Court can deal with any industrial condition that comes 
into dispute. The wages boards do not publish the reasons for their 
determinations; the Federal Court does. As a result I find that the 
wages boards frequently look for guidance in their action to the reason¬ 
ing of the Federal Court. The wages boards, within the limits of area 
assigned to them, bind all employers by their determinations; the 
Federal Court can only bind those who are concerned in the dispute. 

Relative Success of the Court in Preventing Strikes 1 

In the whirling confusion of the times how far has this Court aided 
in securing the continuity of industrial operations ? There occurred 
1,647 strikes in Australia during the years 1914-15-16-17; but so 
far as can be traced only three of these 1,647 strikes occurred in 
disputes that could possibly be entertained by this Court. 

The Court is empowered to deal with such disputes as extend 
beyond the limits of any one state; and before the Court was created 

1 Ibid. (December, 1920), pp. 106-n. 


» 


892 


THE WORKER IN MODERN ECONOMIC SOCIETY 


there were many strikes in such disputes. Even from 1904, when the 
Court was created, up to May, 1919, there were only three disputes at 
the most within its jurisdiction that were accompanied by a strike— 
partial or general. 

The greater the existing unrest, the more remarkable do these 
figures appear. But apart from these telling figures there have been, 
to my personal knowledge, many cases in which strikes would have 
occurred but for the influence of the Court. It is quite a common 
thing for the officers of a union to restrain their members from strike 
on the ground that the claims are to be brought before the Court, and 
that the Court will not deal with them if the members strike to obtain 
what they seek. Since May, 1919, however, the number of strikes in 
disputes which the Court has power to handle has increased. There 
was, first, the seamen’s strike, May to August, 1919; then the marine 
engineers’ strike; and now (July, 1920) the gas strike. 

The Compulsory Feature 1 

From our Australian point of view, the objections so fiercely urged 
in America and in Great Britain to compulsory arbitration appear to 
be fanciful and irrelevant. Compulsion may be applied at either of 
two points: compulsion to submit to arbitration before strike, and 
compulsion to obey the award. Under the Australian act, both kinds 
of compulsion are applicable; and no voices, so far as I know, are now 
raised against either. Regulation by tribunals of some sort is 
accepted; it is welcomed especially by the unions—the great majority 
of the unions. In the next place, while it is quite true that well-drawn 
collective agreements would be, as to most subjects, preferable to 
awards, it is generally impossible to get such agreements. Sometimes 
there are thousands of respondents, often hundreds; many put in no 
appearance and will make no agreement. Even among the respond¬ 
ents who do appear, there are many who will dissent from certain 
proposals. If the Court has no compulsory power at all, it must very 
often wait in vain for universal consent. There will either be no 
agreement at all, or the agreement must be on the lines dictated by 
the most obstinate. With compulsion in the background, the agree¬ 
ment will be on the lines which the reasonable employers favour. 
Under the Act, the first duty of the Court is to try to get agreement; 
and only if and so far as it cannot get agreement as to a claim to award. 
The ideal of the court is to get such a regulation as the parties ought to 

1 Ibid. (December 1920), pp. 126-27. 


t 



METHODS OF SECURING INDUSTRIAL PEACE 


893 


put in a collective agreement; and compulsion means merely that as to 
claims on which the parties cannot agree, or as to which some of the 
parties will not agree, the Court can make an award. Very often the 
mere fact that the Court has a power of compulsion in reserve impels 
the parties to find a line of agreement; and reasonable employers 
are more willing to make concessions when they feel that their compet¬ 
itors are to be bound by the same terms. In the analogous matters 
of protecting workers from dangerous machinery, of providing com¬ 
pensation for accidents, of limiting the hours of children’s work, there 
could have been no relief if the workers had had to wait for universal 
agreement on the subject; and legislatures have had to make such 
matters the subject of direct coercive enactment. 

c) THE KANSAS COURT OF INDUSTRIAL RELATIONS 1 

• 

When labor and capital refuse to work harmoniously together and 
when the tactics of either threaten to interrupt and cut off the produc¬ 
tion and distribution of essential commodities, what is the proper 
course of action for the body politic ? Mr. Henry J. Allen, the aggres¬ 
sive governor of Kansas, evolved an idea out of the coal strike of 
November and December, 1919, and embodied it in the act creating the 
Kansas Court of Industrial Relations. 

This act provides: a) that the operation of industries, employments, 
etc., is “affected with a public interest ” and therefore subject to super¬ 
vision by the state “for the purpose of preserving public peace, pro¬ 
tecting the public health, preventing industrial strike, disorder and 
waste, and securing regular and orderly conduct of the businesses 
directly affecting the living conditions. 

b) That a Court of Industrial Relations be created, consisting of three 
judges appointed by the governor. The first judges appointed are to 
hold office for three, two, and one years respectively; thereafter the 
appointments are for a period of three years. 

c) The the court upon its own initiative may interfere when it shall 
appear to the court that the controversy may endanger the continuity 
and efficiency of service. If it appears to the court that the parties* 
are unable to agree, it is under duty to interfere: (1) upon complaint 
of either party to the controversy; (2) upon complaint of any ten 
taxpayers of the community in which an industry is located; (3) upon 
complaint of the attorney-general of the state of Kansas. 

1 Taken with permission from an article by Willard E. Atkins, Journal of 
Political Economy (April, 1920), pp. 339-52. 


894 THE worker in modern economic society 


d ) That the court has power to summon all necessary parties , investi¬ 
gate, and make all necessary temporary findings and orders, and, after 
a hearing to make findings, stating terms and conditions “upon which 
said industry, employment, utility, or common carrier should be there¬ 
after conducted.” 

e) In case of limitation , or cessation of industry which seriously 
affects public welfare the court can take action to “take over, control, 
direct, and operate the industry.” 

/) The penalty provision of the Act states that anyone guilty of 
violating the Act or any valid order of the Court of Industrial Relations 
shall be deemed guilty: (1) of a misdemeanor and subject to a fine 
of one thousand dollars or imprisonment in the county jail for one year, 
or both penalties; (2) if as an officer of either corporation or organiza¬ 
tion he shall wilfully use the power or authority incident to his official 
position with intention to influence or impel violation he will be deemed 
guilty of a felony and subject to a fine of five thousand dollars or two 
years in the county jail, or both penalties. 

Other outstanding features of the Act are the provisions declaring: 
the court may order changes in the matters of working and living 
conditions, hours of labor, rules and practices, and assure a reasonable 
minimum wage, or standard of living; the right of capital to a fair 
rate of return; the right of unions incorporated or unincorporated to 
bargain collectively and to be represented by men of their own choos¬ 
ing. Provision is made for appeal from decisions of the court to the 
Supreme Court, which shall put the appeal first upon its docket, thus 
avoiding delay, but the appeal must be made within ten days. After 
thirty days have elapsed, in the absence of appeal, the findings of the 
court are absolute and may be changed only by agreement of both of 
the parties with the consent of the court, or by order of the court, which 
will consider appeal for revision only after the parties have made a 
bona fide effort to conform to the decision for a period of sixty days 
and have found it to be unjust. The use of the strike, boycott, or 
picketing is forbidden to labor and employers may not limit or cease 
operations in order to affect either the wages of the worker or the price 
of a commodity. 

The doctrine of public interest in the Kansas Act is an interesting 
contribution to the constantly growing concept which has been creep¬ 
ing into legislation. Why such a great growth in the doctrine of 
public interest should occur at this time is explainable only through 


METHODS OF SECURING INDUSTRIAL PEACE 


895 


considering the historic background of the legislation. First, the Act 
seemingly is colored with the impatient thought of the present post¬ 
war period. Indeed, under more tranquil conditions it is difficult to 
conceive of similar legislation evolving for some time to come. The 
mining of coal in Kansas has been attended with many strikes, the 
miners around Pittsburg leading in an exasperating succession of effort 
none too well defined in purpose or results. It remained, however, for 
the nation-wide bituminous strike to bring matters to an issue. 
When that occurred the state called for volunteers to mine coal. 
Guarded by the Fourth Regiment, Kansas National Guards, volunteers 
proceeded to Pittsburg and through their efforts and that of other 
volunteers Crawford, Cherokee, and Linn counties produced about 
two hundred cars of coal. Later came the settlement of the national 
strike. 

Governor Allen saw an opportunity to clinch matters. A special 
session of the legislature was called. The members came with deter¬ 
mination to make a finished job of it. “The radical labor,” the 
governor states, “headed by representatives of the four railway 
brotherhoods, swarmed. They tried first their old-fashioned plan of 
intimidation. They sought to re-enact the tragedy of the Adamson 
Law. Then they pleaded. Then the attorneys for the employers 
protested and after that these Kansas legislators passed the bill and 
went home.” 

The incident is indeed an example of legislative promptness and 
decisiveness. One cannot help wishing, however, that the situation 
had been a little less tense, that there had been a little less of the spirit 
of settling the matter once and for all. Had the minds of the legisla¬ 
tors been somewhat less blunted by the immediate circumstances, it is 
possible that it might have been clear: (1) that there are limits to the 
implications which some people find in the doctrine of public interest, 
for when, as it frequently happens among public utilities, increased 
wages mean increased rates, the public cannot be impartial; and 
when difficulty arises between employer and employee, especially when 
the doctrine of public interest is spread as it is in the Kansas Act, the 
interest of the public is very distant and indefinite as compared to that 
of the worker who is fighting for what he considers his very existence; 
(2) that American workingmen have had what they consider bitter 
experience with the courts, and the Act might provoke rather than 
curb difficulty; and (3) that the proposed court provokes for appoint- 


896 THE WORKER IN MODERN ECONOMIC SOCIETY 


ment of judges by the governor, who is not bound in any way to make 
it a truly representative group. 1 

Naturally a law of such extraordinary content has aroused criticism 
and defense of the most virulent type. Governor Henry J. Allen, who 
called the legislature in special session to present the bill and who 
sponsored it throughout the proceedings, fought the criticism of the 
four railway brotherhoods and other labor groups in his speech on 
January 5, the opening day of the session, admitting that “from all 
over the state there is coming a flood of protest from various union 
bodies” but the critics are those “who are not concerned in this bill, 
who do not belong to the essential industries affected by it, and who 
have made absolutely no study of the plan, but who are being urged 

by professional labor leaders to save the day.” Frank P. Walsh, 

» 

who appeared at the public hearings and led off with a four-hour 
speech against the measure, calls it “a cat of nine tails with which 
the backs of labor may be lashed,” a plain violation of the thirteenth 
amendment prohibiting slavery and involuntary servitude, and 
Samuel Gompers, in a speech at Trenton, New Jersey, on March 14, 
stated that “Governor Allen will have to reckon with labor if he lives 
long enough.” 

Manifestly the Act is contrary to what labor has commonly con¬ 
sidered to be its interests. Although the Act permits organization and 
recognizes it, it declares labor has the right to representation in dis¬ 
putes and in court through attorneys or other individuals of its own 
choosing, and although a declaration is made affirming labor’s right 
to a fair wage and decent conditions and although the court does not 
interfere except where disagreements affect production and transporta¬ 
tion, still these concessions have not reconciled labor, ordinarily, to 
the degree that labor has felt it could give up the right to strike. The 
experience in this country, the history of legislation in England leading 
up to the British Industrial Disputes Act of 1906, which places no 
limitation upon the strike, the Canadian Industrial Disputes Act, 
which makes provision for certain strikes to be called legal and has not 
prevented many illegal ones, and the checkered history of compulsory 

1 It is well to note the degree to which the legislation differs from the suggestions 
advanced by the recent Industrial Conference called by President Wilson. No 
machinery is created to further conciliation, to stimulate co-operation of the two 
parties through agreement among themselves. Nor is there any provision for one 
member to represent capital, another labor, and a third the public. The court is 
composed of three men appointed by the governor, the theory being that they 
represent the entire public. 


METHODS OF SECURING INDUSTRIAL PEACE 897 

arbitration systems, do not suggest that Kansas has a substitute for 
strikes, or that striking may not be an excellent thing to recognize on 
certain occasions. 

Yet too broad generalizations must not be made. Kansas is not a 
manufacturing but an agricultural state. Labor, on the whole, is 
weak. There is relatively little feeling of class cleavage. Although 
in the neighborhood of Pittsburg some tense feeling has existed among 
the miners, labor problems have been slow to grow. 

Moreover, there is no reason to think that the present Act will not 
be amended from time to time as experience points out its imperfec¬ 
tions; nor is there reason to believe that if it is declared unconstitu¬ 
tional, 1 no further attempt will be made to bring legislation more 
actively to bear upon problems of labor and production. Conceiv¬ 
ably the court will be judicious enough not to burn its fingers with 
attempting the impossible. The present Act is but a first step; 
whether in the right or wrong direction is not yet wholly clear. There 
are possibilities in it. At least, if it is in the wrong direction, the 
experiment will confirm somewhat the views of those who believe that, 
though the field is a proper one for legislation, the approach ordinarily 
should not be with the idea of taking away the right to strike from 
labor or the right to lockout from the employer, but with the idea of 
equalizing the situation, of removing confusion and uncertainty as to 
the status of the law, and of placing emphasis upon mediation and 
conciliation, through providing machinery for facilitating such 
achievements. 

2. COMPULSORY INVESTIGATION 

a) NINE YEARS OF THE CANADIAN ACT 2 

Comment in the United States on the Canadian industrial disputes 
investigation act within the last six months has been at once abundant 
and diverse. “The wisest and most successful labor legislation any¬ 
where adopted,” Charles W. Eliot wrote of it. “A false step, reac¬ 
tionary, un-American,” is the verdict of Samuel Gompers on its 
application to this country. These two remarks typify the dis¬ 
cussion that has been going on since President Wilson first recom¬ 
mended to Congress that it pass an act similar in principle to the 
Canadian law. 

1 Later, in a unanimous decision by the United States Supreme Court in 
June, 1923, on a case involving packing house employees, the part of the act 
providing for the fixing of wages was declared unconstitutional.— Ed. 

2 Adapted with permission from Ben M. Selekman, “Nine Years of the 
Canadian Act,” Survey (March 31, 1917), PP- 747 “ 5 °- 


8 9 8 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Under the law in question, which was enacted in 1907, it is illegal 
to declare a strike or lockout in mines or other public utilities until a 
full investigation into the merits of the dispute has been completed. 
Thirty days’ notice must be given of any intention on the part of 
either employer or workers to secure a change in wages or working 
conditions. If at the end of this period no agreement has been 
reached, application must be made for a board of investigation and 
conciliation. The minister of labor then arranges for the creation of 
such a board, one member of which is nominated by the employers, 
one by the employees, and a third by joint recommendation of the 
other two members. 

This board considers the facts of the case in dispute and makes its 
report to the minister of labor. After that, employers and employees 
are free to accept or to reject the recommendations and to resort to 
strike or lockout. Penalties are provided, ranging from $10 to $50 
a day for each man, if employees strike, and from $100 to $1000 a 
day if employers lockout their workers without asking for a board or 
without waiting for its decision. 

It is interesting and significant that hardly any of the Canadian 
trade unionists advance the argument heard in this country that such 
a law means compulsory servitude for the wage-earners. On the 
contrary, most of them approve of the principle of the law, and direct 
their criticism purely against administrative defects. Their object 
was chiefly that the minister of labor has refused to appoint a board on 
one or two occasions upon the application of a local union; that delays 
have often characterized the appointment and the hearings of the 
boards; and that it is difficult for them to secure a favorable decision. 

To understand the objections of organized labor in Canada, we 
ought to know the nature of the procedure under the act. Contrary 
to the common conception in this country, the disputes act has oper¬ 
ated not as “compulsory investigation,” but as a “conciliation” 
measure. That is, the machinery of the law is used to bring together 
the opposing parties under public auspices and to adjust their diffi¬ 
culties. The compulsory features of the act which impose a penalty 
for violation and the definite rules of procedure have not been empha¬ 
sized in its administration. For this reason, the use of stenographers 
at the hearings held in the presence of the boards has always been 
discouraged. 

The conciliatory spirit and flexible manner in which the act has 
been administered has probably been responsible for the delays of 


METHODS OF SECURING INDUSTRIAL PEACE 899 

which organized labor complains. The official reports of the Canadian 
Department of Labour indicate that at times long periods have elapsed 
between the application for boards, their constitution, and the render¬ 
ing of their reports. 

How far these delays constitute a real grievance should be indi¬ 
cated to some extent by the character of the reports, when they are 
finally rendered. They should also show whether, as many trade 
union officials contend, it is difficult for labor to secure a favorable 
report because of the bias of the chairman. 

For the nine-year period ending March 31, 1916, there were 
altogether 161 fully established boards which conducted hearings. In 
ninety-two of these disputes, or over one-half, the reports were unani¬ 
mous. In only thirty-five cases did the employes’ representative 
dissent from the majority report, and in twenty, the employers’ 
representative dissented. 

As for our editorial writers, public officials and employers, Cana¬ 
dian experience hardly justifies their enthusiasm for the essential 
feature of the proposed measure—that no strike or lockout shall 
legally take place before an investigation is completed. In Canada 
this compulsory feature has been a dead letter so far as the miners and 
unskilled workers are concerned. As for the railroad brotherhoods, 
it is very doubtful whether it is necessary to restrain them from striking 
before the completion of an investigation. Most of the railroad 
employes stated that they observed the law not because they were 
afraid of being prosecuted, fined, or imprisoned but because they did 
not wish to appear as law breakers in the eyes of the community and 
thus antagonize public opinion. “The railroad brotherhoods like 
to have the reputation of being lawabiding, intelligent citizens and it is 
for this reason that we have observed the law,” declared a representa¬ 
tive of the locomotive firemen and enginemen. In other words, they 
are not opposed to public investigation but they are not greatly influ¬ 
enced by the compulsory features of the law. 

Prof. Adam Shortt was chairman of eleven boards in the first two 
years after the act was passed. In every one of these disputes a 
settlement was effected and he has the reputation of having been the 
most successful chairman appointed under the act. In his opinion, 
the clauses which restrain the men from striking pending investigation 
are practically unnecessary. 

“The only value they have,” he said in substance, “is that they 
make the union reluctant to fly in the face of public opinion. It 


900 


THE WORKER IN MODERN ECONOMIC SOCIETY 


does not make them afraid to violate the law because they know that it 
cannot be enforced. But the same thing could be gained if you simply 
provided the machinery for investigation. Those unions which respect 
public opinion would not strike in the face of this established machin¬ 
ery. Another thing,” he continued in substance, “if it has been found 
difficult to enforce the law in Canada, it means that it will be much 
more difficult to enforce a similar law in the United States. For in 
this country [Canada], under the cabinet system of government, 
fewer laws are passed, the whole government is held responsible for 
them, and they are taken much more seriously than in your country. 
We don’t speak of laws as being ‘dead letters’ as you do.” 

Certainly the public interest in the continuous operation of the 
nation’s railroads is so vital that the facts ought to be known before 
a strike or lockout occurs. Canadian experience does not show just 
how effective public opinion can be in preventing an interruption of 
services. No attempt has been made in Canada to build up a body 
of continuous facts regarding labor disputes on public utilities, and 
the data on wages, cost of living, hours of work, rates and dividends 
available in the different government departments have not been 
collected and placed at the disposal of the boards. Each one has made 
its report on the facts presented by the parties involved in the par¬ 
ticular dispute which was before it for adjustment. 

The community ought to have the facts. The feeling is growing that 
the community ought to become a more powerful factor in preventing 
a tie-up of a public service industry. The public, on the other hand, 
cannot exert a very strong influence unless it has all the facts necessary 
to an intelligent opinion. Heretofore it has had them only as they 
were furnished to the press by the two partisans involved in labor 
disputes. They should be furnished by an impartial government 
tribunal on which both employers and workers may have representa¬ 
tion. 

But this does not necessarily mean that we should restrict the 
railway employes’ right to strike. It does mean, however, that the 
government ought to establish the machinery both for the continuous 
collection of all the facts available on the various aspects of labor 
controversies and for an inquiry into the merits of particular disputes 
that arise from time to time. With a background of information 
previously collected, the facts about a particular dispute become more 
illuminating. Thus a fully enlightened public could exert a more 
intelligent influence. 


METHODS OF SECURING INDUSTRIAL PEACE 


901 


b) THE RAILROAD LABOR BOARD 1 

The first act of the Federal Government for the settlement of 
railway-labor disputes was passed in 1888. The provisions of the law 
of 1888 provided for voluntary arbitration whenever any difficulty 
between railway managers and employees threatened to interfere with 
the movement of interstate commerce. The arbitration provision 
was never used throughout the 10 years in which the law was on the 
statute books. The investigation authorized by the act—the part 
of the law which seemed to most people at the time of the passage of 
the law the less important feature, was brought into use in one strike 
of large proportions; ‘namely, the Pullman Strike of 1894. 

The Erdman law of 1898, which followed the law of 1888, did not 
provide for an investigation by the Federal board but it made provision 
for mediation and conciliation. 

Only one of 12 sections in the act dealt with mediation and con¬ 
ciliation. Yet, in the operation of the law, this one section proved of 
more significance than did all the other sections combined. 

For eight and a half years after its passage the use of the Erdman 
Act was attempted only once. And this resulted in a complete failure. 
Thereafter until the passage of the Newlands law in 1913, 61 cases were 
settled under the Erdman. Act. Twenty-six of these cases were 
adjusted through mediation, 10 by mediation and arbitration and 
6 by arbitration alone. Of the remaining 19 cases some were settled 
without the intervention of the mediators but after their aid had 
been invoked, and others were cases in which the second party refused 
to accept the mediation by this commission. 

Early in 1912, there was a concerted action by the Brotherhood of 
Locomotive Engineers on 52 railroads in the East. They demanded 
an increase in wages. Messrs. Knapp and Neill offered their services 
in an attempt to settle the dispute through mediation. In this they 
failed to get the desired results. However, they did arrange for a 
board of arbitration. The roads appointed Daniel Willard, president 
of the Baltimore & Ohio Railroad; the men appointed P. H. Morrissey, 
grand master of the Brotherhood of Railroad Trainmen. The neutral 
members were Oscar S. Strauss, Dr. Albert Shaw, Otto M. Eidletz, all 
of New York; President Charles R. Van Hise, of the University of 
Wisconsin; and Frederick N. Judson, of St. Louis. 

1 Adapted with permission from Clyde Olin Fisher, “Use of Federal Power 
in Settlement of Railway Labor Disputes,” U.S. Department of Labor Bulletin 
No. 303 , pp. 7-97. 


902 


THE WORKER IN MODERN ECONOMIC SOCIETY 


The part of the report that is of significance in this study is that 
containing the recommendations made by the commission. In all 
contests of this kind the commission insisted the interests of the public 
must be held to be paramount; “ it is an intolerable situation when any 
group of men, whether employees or employers, have the power to 
decide that a great section of the country, as populous as all of France, 
shall undergo great loss of life, unspeakable suffering, and loss of 
property beyond power of description through stoppage of a necessary 
public service.” The report included an appraisal of the Erdman Act, 
which commended that clause making it unlawful for either side to an 
arbitration to call a strike or to inaugurate a lockout following the 
award unless 30 days’ notice were given to that effect. But the two 
great weaknesses, it appeared to the commission, were those making 
it obligatory to hand down a decision within 30 days from the appoint¬ 
ment of the board of arbitration and the failure to give the public 
adequate representation on the board. 

During the arbitration of the firemen’s case the conductors and 
trainmen in the East presented demands to the roads for increased 
pay and for changes in working conditions. In order to prevent a 
strike that would have been a serious matter for the entire country, 
President Wilson called a conference of the two parties to meet him 
in Washington. The representatives of the contestants agreed that 
if the bill then before Congress (S. 2517) were enacted they would sub¬ 
mit the controversy to arbitration under the terms of the new act. 
This supplied the stimulus that was the immediate cause of the passage 
of the law known as the Newlands law which provided for an increase 
in the number of arbitrators that might be used; the creation of a 
United States commission of mediation and conciliation to take over 
the work that had been done by Judge Knapp and Commissioner Neill; 
authorization for the board to take the initiative in settling contro¬ 
versies; provision for the interpretation of the award in the event of a 
misunderstanding of it; permission to extend the length of time within 
which the board must reach a decision, etc. 

Experience has shown that in the operation of the Newlands law 
just as in that of the Erdman Act, mediation has been of more impor¬ 
tance than arbitration. In the 4-year period ending June 30,1917, the 
board served in 71 controversies. Fifty-two of these were settled 
wholly by mediation, six by mediation and arbitration, three by the 
contestants without the aid of the mediators, one by act of Congress, 
and one at the time of making the report was yet unsettled. 


METHODS OF SECURING INDUSTRIAL PEACE 


903 


Timothy Shea, assistant president of the Brotherhood of Locomo¬ 
tive Firemen and Enginemen, had announced in December, 1915, that 
the brotherhoods were planning the adoption of the eight-hour day, 
and that they would not arbitrate the question. On August 9 the 
railroad officials asked the men to join with them in a request for the 
intervention of the United States Board of Mediation and Conciliation. 
The men refused to do this. President Wilson invited both sides to 
meet him for a conference in Washington. At that time he proposed 
to the representatives of the two sides that the 8-hour principle be 
accepted and that a commission be appointed by him to investigate 
the demand for time and a half for overtime, the second of the two 
principal demands made by the men. The employees accepted this 
suggestion, but the railroad officials objected to giving the 8-hour day 
before an investigation was made. 

Accordingly, on August 29 President Wilson appeared before 
Congress and asked the immediate passage of a law to prevent the 
threatened strike. With the approval of the President on September 3 
the law, known as the Adamson law, was enacted. 

Mr. Carter, in January, 1917, prepared a statement as to why the 
railroad men have refused to accept arbitration with the managers. 
He gave six reasons: (1) The roads had manufactured a public opinion 
that would have been hostile to the men; (2) the standard of the 
United States Board of Mediation and Conciliation for the selection 
of neutral arbitrators had proved to be unfair and partial; (3) the 
statistical evidence presented by the roads, although partisan and not 
scientific, would have overwhelmed the neutral arbitrators; (4) the 
influence of precedent would have operated against the men; (5) “the 
railroads, while proposing arbitration, refused to permit about 75 of 
the smaller roads to participate in the arbitration. Where these roads 
believed that the small number of employees made it possible for 
them to win a strike they refused to delegate authority to the railroads’ 
committee to include them in the arbitration;” (6) the award would 
have been administered by the managers in accordance with their 
own interpretation of its meaning. 

The entrance of the United States into the European war and the 
taking of the railroads out of private hands which followed brought 
with it peculiar problems in the railway labor field. 

In order to have the machinery to settle the many wage questions 
the director general in this general order announced the creation of a 
Board of Railroad Wages and Working Conditions. Recommenda- 


9°4 


THE WORKER IN MODERN ECONOMIC SOCIETY 


tions of this new board were submitted to the Director General for 
approval before they could be put into effect. 

One of the objections to arbitration which the brotherhood leaders 
had urged was that the employer alone assumed the role of the inter¬ 
preter of the various awards. In Order No. 13 Mr. McAdoo approved 
machinery which was designed to handle matters of interpretation and 
the adjustment of personal differences. The adjustment board was 
to consist of eight men, four to be selected by and paid by the railroads 
and four to be selected by and paid by the employees. 

In the early part of 1919 Congress began to consider the future 
status of the railroads and to devise some plan for their operation after 
the anticipated peace with Germany and the automatic termination of 
Federal control. The law which finally passed both Houses of Congress 
was the transportation act of 1920. One section, Title III, is called 
“Disputes between carriers, and their employees and subordinate 
officials.” Its principal provisions are: 

Both the employers and the employees are to exert every reasonable 
effort by means of conference and otherwise to adjust any dispute that may 
interrupt interstate commerce. Failing to reach an agreement, they shall 
refer the controversy to the railroad board of labor adjustment authorized 
by the act. 

Local or regional railroad boards of labor adjustment may be established 
by voluntary agreement between any carrier or group of carriers and any 
employees. Such boards are empowered to decide disputes involving griev¬ 
ances not decided by conferences as mentioned above. The services of any 
such board may be invoked by any carrier; by a group of not less than 100 
employees; upon the initiative of the board itself; or by request of the Rail¬ 
road Labor Board in case an interruption of traffic seems imminent. 

The Railroad Labor Board is to consist of nine members. Three mem¬ 
bers are appointed by the President from a group of six names suggested by 
the employees, three from a group of six names suggested by the carriers, 
and three members named directly by the President. The President is to 
fill any vacancies that occur and is to appoint any member representing the 
employees or the carriers if they fail to suggest names within a given time. 

No member of the Railroad Labor Board shall, during his term of office, 
hold a position in a railway labor organization or be financially interested in 
such organization. Neither shall he be pecuniarily interested in any carrier 
coming within the law. 

The Railroad Labor Board is to hear any dispute regarding grievances, 
rules, or working conditions which an adjustment board certifies it has been 
unable to settle, or which it seems such board will be unable to settle within 
a reasonable time. The Labor Board can, also, on its own initiative, take 


METHODS OF SECURING INDUSTRIAL PEACE 


905 


any dispute into consideration if it seems necessary to take the question 
from the adjustment board. In case no adjustment board has been organ¬ 
ized the disputes can come before the Railroad Labor Board in one of three 
ways: (1) upon application of any carrier or any organization of employees; 
(2) upon written petition from not less than one hundred unorganized 
employees; (3) upon the board’s own motion. 

A dispute concerning wages can come before the Railroad Labor Board 
in any one of three ways as mentioned above. Here the adjustment board 
has no jurisdiction. The Railroad Labor Board also has the power, within 
10 days from the reaching of an agreement, to suspend any settlement which 
may have been arrived at by conference between the employers and the 
employees if such an agreement is likely to necessitate an increase in traffic 
rates of the carriers. 

The law states definite criteria for the determination of a “fair wage”: 
the scale of wages paid for similar kinds of work in other industries; the 
relation between wages and the cost of living; the hazards of the employ¬ 
ment; the training and skill required; the degree of responsibility; the 
character and the regularity of the employment; and inequalities or increases 
in wages or treatment, the results of previous wage orders and adjustments. 

Five of the nine votes are necessary to a decision. And if it is a question 
involving wages at least one of the representatives of the public group must 
concur in the decision. Full publicity is to be given the decisions of the 
board. In fact, this is the only means by which it is hoped to secure the 
acceptance of the awards made. The board is instructed, further, to investi¬ 
gate the relations between the employers and the employees and to publish 
its conclusions from time to time. 

All the necessary machinery is provided for the subpoenaing of witnesses, 
taking testimony, and for making of rules and regulations for the guidance 
of the board. 

The Railroad Labor Board may publish its conclusions in case it con¬ 
siders that the findings of any adjustment board are violated. 

The act of 1920 marks a new departure in the means adopted to 
adjust labor difficulties on the railways. Prior to the period of Federal 
control the emphasis in all these measures had been placed upon the 
voluntary nature of the negotiations. 

The law of 1920 establishes the primacy of the public interest. 
It is true that, in this respect, it does no more than was done under 
Federal control. But Federal control was exercised in a period of 
war emergency and is not to be considered apart from the extraor¬ 
dinary circumstances which gave rise to it. 

Even now the voluntary cooperation of the contending parties is 
relied upon to settle these disputes in so far as possible by means of 


go6 


THE WORKER IN MODERN ECONOMIC SOCIETY 


conference committees. But such settlement can be set aside by the 
Railroad Labor Board if it is of such a nature as to necessitate a change 
in traffic rates, charged by the railroads. Here, then, is the final 
capstone placed upon the recognition of the welfare of the general 
public. 

3. ARBITRATION BY MUTUAL AGREEMENT 1 

The fundamental idea in the agreements in the men’s clothing 
industry is that of securing a peaceful and mutually advantageous 
method of carrying on industry. The method provides (1) for collec¬ 
tive bargaining between firm and union both in making the original 
contract and subsequently to some extent in dealing with new matters, 
(2) for a permanent body (a board, or boards) to act judicially in 
interpreting and applying the agreement and, what is fully as impor¬ 
tant, to maintain as a living process the central idea of a joint interest 
in the on-go and conditions of the industry. To a degree as yet unde¬ 
termined this “impartial machinery” also takes account of “public” 
interest, as distinct from the interests of the contracting parties. 

The firm and the union, accordingly, negotiate an agreement which 
(a) declares the general end sought through the agreement by the 
respective parties; (b) lays down a very few specific terms, e.g. the 
number of hours that constitute a week’s work, the provision for equal 
division of work in slack periods, the general schedule of wages with 
the methods for making readjustments where needed during the 
period covered by the agreement, the rights of the two parties as to 
hiring, discharge and discipline; (c) sets up one or more boards to act 
both in a judicial procedure by hearing cases and rendering decisions, 
and in an investigative, mediating and quasi-legislative capacity in 
dealing with situations not clearly covered by any rules. 

In this latter capacity the general end or purpose of the agreement 
is regarded as supplying a principle to which recourse can be had when 
specific rules are lacking. In the Chicago agreements distinct func¬ 
tions are assigned to two separate boards called the Trade Board, and 
the Board of Arbitration. The first is the primary board for adjusting 
grievances, and changes in piece rates due to changes in styles, and for 
determining questions of fact and testimony. The second hears 
appeals, but concerns itself mainly with questions of principle and the 
application of the agreement to new issues as they arise, which may 

1 Taken with permission from James H. Tufts, “Building a Code of Law in 
the Clothing Industry,” Columbia Law Review (May, 1921), pp. 405-13. 


METHODS OF SECURING INDUSTRIAL PEACE 


907 


either be referred to it by the Trade Board or brought directly before 
it by petition from either party. In cities other than Chicago the 
dual system of boards has either not been set up by the agreement, or 
not used in practice. But in a market as large as Chicago where some 
40,000 workers are employed there have seemed to be sufficient issues 
to keep two Trade Boards and a Board of Arbitration occupied pretty 
continuously. The period observed included parts of an unusually 
active and an unusually slack season and hence offered many special 
problems as well as the ordinary cases. 

1. As is clearly stated by Professor Hale any such plan of arbitra¬ 
tion based on voluntary contracts involves a balance of power as well as 
a supposedly impartial justice. Shall there be any limit to the number 
of apprentices, or shall a firm engage as many as it desires ? At first 
it seems a simple matter of recruiting and training necessary craftsmen, 
or, to a teacher, a matter of affording a vocational opportunity to a 
boy. But it soon appears as a question of balance of power: the more 
apprentices, the greater the supply of skilled cutters; the fewer 
apprentices, the better control of the situation by the union. Who 
shall select the candidates ? It appears at first the obvious province 
of employment management. But it soon emerges that the foreman 
who has it in his power to appoint may strengthen his hold upon a 
given worker by promising to appoint the worker’s son, whereas if the 
union has the right to nominate, the prestige of the union organization 
is correspondingly increased. Shall a more effective process or method 
of production be installed ? The obvious fact is that apparently the 
public as well as the firm will gain, and the worker will not suffer any 
direct reduction in rate of pay. But if the improved process means 
that fewer men are needed, if the more efficient subdivision of the 
process means that the all-around craftsman is no longer essential, the 
union sees power slipping away and reappearing in the employer’s 
scale of the balance. At the expiration of an existing agreement the 
parties negotiate a new one and the terms of the new agreement repre¬ 
sent the bargaining power of employer and workman. Is it fair for 
the arbitrator to render a decision which shall not merely affect wages 
and working conditions during the life of the agreement but shall to 
some extent affect the bargaining power of the parties in making 
another agreement ? 

How far should an arbitrator essay in an humble fashion the role 
of a statesman and endeavor to advance a philosophy of social order, 
and how far should he follow the policy of ‘"hands off, let the contend- 


908 the worker in modern economic society 


ing interests settle for themselves the issues involving balance of 
power” just as the courts often refuse to pass on matters which, they 
say, belong to the legislature? If the arbitrator sways the balance 
strongly he is likely to make the losing party so dissatisfied that it 
will refuse to renew the agreement. If his decision is merely a reflec¬ 
tion of the actual balance of power he seems not fully to justify the 
confidence reposed in him by the parties. For they seem to ask him 
to see farther from his position above the battle. And if he does rely 
on some philosophy of society in making his decision, shall it be the 
prevalent philosophy of present American life, or shall it be that of 
some supposedly better order ? During my own experience the deci¬ 
sions of the Board on which I sat aimed in general to avoid any per¬ 
manent displacement of the balance of power toward either end of the 
beam. They sought to effect this by giving increased power to the 
impartial machinery pending negotiations and revisions of the agree¬ 
ment by the parties at the proper time, i.e., when the existing agree¬ 
ment should expire and the question of renewal should arise. For 
example, temporary increases in apprentices were allowed as an 
emergency matter to firms which should satisfy the Board of their 
need for them, the percentage to revert automatically to the previous 
ratio as fast as apprentices should complete their term. In its general 
attitude I presume the Board was, unconsciously perhaps, acting in 
accord with the views of Mr. Justice Holmes as expressed in his address 
on “Law and the Court,” although this address had not then come 
under the eye of the Board: “ While there still is doubt, while opposite 
convictions still keep a battle front against each other, the time for 
law has not come; the notion destined to prevail is not yet entitled to 
the field. It is a misfortune if a judge reads his conscious or uncon¬ 
scious sympathy with one side or the other prematurely into the law, 
and forgets that what seem to him to be first principles are believed 
by half his fellow-men to be wrong.” 

Certain decisions which involved a social philosophy will be noted 
under subsequent heads. 

2. A frequent question was that of broad versus strict interpreta¬ 
tion of the agreement and of the rights and duties of the parties under 
it. One party would claim it had a right to a certain course of action 
because nothing in the agreement forbade it; or again a party would 
deny that anything in the agreement authorized an assertion of author¬ 
ity demanded by the other party in the interest *of “justice.” A 
typical case which brought up the issue of possible mutual obligations 
not specified in the contract was as follows: A certain firm in addition 


METHODS OF SECURING INDUSTRIAL PEACE 


909 


to its main factory had opened and carried on for some weeks another 
factory, in which a different quality of clothing was made. This 
proved unprofitable and the firm decided to close this branch. The 
agreement had no clause explicitly covering such a situation. A 
clause which was framed for a somewhat analogous situation reads: 
“When sections are abolished, the company and its agents shall use 
every effort to give the displaced workers employment as much as 
possible like the work from which they were displaced, within a reason¬ 
able time.” 

There was some dispute as to whether the firm had given any 
previous notice to the workers of its intention to close the factory. 
The Board of Arbitration upheld in principle the ruling of the Trade 
Board which had first passed upon the case. It took the position that 
so far as the parties to these agreements were concerned labor is not 
merely a commodity. It held that the fundamental understanding 
which underlies the agreement is that the parties treat each other with 
mutual consideration, and that this would require either notice of 
sudden closing of a shop, or some provision to enable workers to find 
positions, or such other method of meeting a situation as might appear 
proper to the Board. In other words it held that here was an obliga¬ 
tion arising out of the status of the parties. In reply to the objection 
that men not infrequently left employ without notice, the Board 
declared that if the whole body of workmen or such a large number of 
them as to cripple business were to leave suddenly without notice and 
go to another shop or for any other purpose, the Board would consider 
that this firm had a just grievance and would hold the union responsible 
to prevent such mass movement without proper notice. This decision 
implied of course a theory diametrically opposed to that of the Adair 
case and to the usual theory as I understand it of the courts where there 
is no explicit time contract. It is generally held that one or all work¬ 
men may be dismissed at any moment or may leave at any moment. 
The basis of this “right” may be supposed to be, as by Mr. Justice 
Harlan, “freedom,” but the actual working of it is to render industry 
insecure. 

3. A highly difficult problem which has its interesting legal 
analogies made its appearance in several cases: the problem of rights 
connected with certain usages of the trades or crafts employed. The 
firm claimed a general right to introduce improvements in machines, 
or in operation, or in organization and division of labor, with the 
provision that if any workman should be thereby affected injuriously 
in wages or in the difficulty of his work he should have redress through 


9io 


THE WORKER IN MODERN ECONOMIC SOCIETY 


the impartial machinery. The particular cases which brought up 
the issue were seemingly of slight importance. Should the linings 
to be cut by machine be piled one hundred high or only ninety as had 
previously been the case? The operator was working by the week 
and consequently his wages would not be affected. Should fabrics 
of different weave or color be piled together and cut in one operation 
or must each style of fabric be cut separately ? At the time when this 
latter question arose there was a greater demand for cutters than 
could be supplied by the union and hence there was no question of 
displacement involved. The union considered the methods in vogue 
as standards sanctioned by usage. It maintained that the industry 
had formerly been in a deplorable condition not only in the matter of 
wages but also in relation to the health and general comfort of the 
workers; that these conditions had been step by step improved and 
standards made by agreement or otherwise; and that if these standards 
or usages could be broken down at will by the employer or even ques¬ 
tioned by the Board their whole position was rendered precarious. 

They felt not only that change in these standards by the employer 
would be like depriving them of their property without due process of 
law; they felt that here were certain absolute rights, which were not 
subject to law, but which on the contrary were to be supported by 
law. In other words they felt as judges have frequently felt about 
rights of private property. In certain cases where an improvement 
in process could evidently be secured, the union was quite willing 
that this should be effected, but just as the private land-holder whose 
property is taken for public use expects to receive some compensation, 
so they would expect if they granted to the employer or to the public 
a waiver of valuable customary rights to receive a quid pro quo. Of 
course the issue is an old one. It arose when machines were intro¬ 
duced. If one compares it broadly to the issue raised by certain legal 
titles to property he will probably find the equities and morals of the 
situation not wholly dissimilar. Much landed and personal property 
undoubtedly represents little or no service rendered to society, and 
at present may be at least as great an obstacle to public welfare as an 
inefficient method of cutting up cloth. Suppose my ancestor bought 
the island of Manhattan for a hundred dollars, or stumbled upon a 
coal or iron mine or an oil deposit in his pasture, or secured valuable 
franchises for a song, is it just that on this account I, myself, should be 
exempted from the necessity of any useful work and should be sup- 


METHODS OF SECURING INDUSTRIAL PEACE 


911 

ported by the hands of society? Suppose my trade ancestor or 
predecessor bargained for a certain conception of a valuable service 
called “a cut,” does this entitle me, his industrial or trade-union heir, 
to a continued advantage therefrom as though it were a specie dollar 
of specified weight and fineness? The prescriptive factor, undis¬ 
turbed possession, is similar. From the standpoint of individualistic 
natural rights, I see no radical difference. 

The Board found itself in several decisions coming to a view which 
suggests certain tendencies in the public attitude toward property. 
It held that usage, whether in craft-practice or in interpretation of 
the Agreement, does establish a sort of prima facie claim, but that 
until this claim has been presented, discussed, and considered before 
the impartial machinery, it cannot be considered as settled. In par¬ 
ticular it held that a workers’ group, like the family group, should be 
encouraged, since under our system it is the only institution for pro¬ 
tecting the interests of a class which is not upon an equality with the 
employer in bargaining power. Hence the Board was unwilling to 
assert unqualifiedly that the employer might change a usage without 
the approval of the impartial machinery. But when a usage clearly 
conflicts with public welfare as involving restriction of output and 
where no matter of health is concerned, it has seemed that usage 
should give way, provided some measure at least of compensation be 
awarded the worker for the loss of an asset or bargaining point. 

4. Wages are agreed upon by negotiation when agreements are 
entered into, but a safety valve for market fluctuations is provided by 
a section in the agreements which reads as follows: “If there shall be 
a general change in wages or hours in the clothing industry, which shall 
be sufficiently permanent to warrant the belief that the change is not 
temporary, then the Board shall have power to determine whether 
such change is of so extraordinary a nature as to justify a consideration 
of the question of making a change in the present agreement, and, if so, 
then the Board shall have power to make such changes in wages or 
hours as in its judgment shall be proper.” 

Cases under this section have arisen from time to time, especially 
under the rapidly rising markets and costs of living since 1917, and this 
has compelled the Board to consider what changes are “proper.” In 
other words are there yet any standards for the “fair wage” which all 
statesmen at election time assure the workman he ought to receive ? 
During the war the rapidly increasing cost of living was generally 


912 


THE WORKER IN MODERN ECONOMIC SOCIETY 


recognized to be a ground for increase of wages. The extraordinary- 
demand for labor in many occupations brought with it an offer of 
wages often in excess of the increased cost of living. In the most 
important cases which came before the Board during my tenure, the 
union asked for an increase of wages which should not only correspond 
to the increased cost of living but should make possible an improve¬ 
ment in the standard of living if the industry could afford it. It 
appeared from figures submitted that previous increases had in the 
main been sufficient to maintain the previous standards of living. 

In some cases previous increases had exceeded the increased cost of 
living. The question then was, should a further increase be granted 
which would permit an improved standard of living. It was shown 
that such increases had already been made in other competitive 
markets. Should those who wear clothing pay a higher wage to those 
who make clothing ? According to views of older days when people 
were divided into successive strata of worth and every occupation had 
its rank, one might consider seriously the question as to where the 
maker of clothing ought to rank in the social and economic scale. 
Our method of individualism and the competitive social order is either 
less or more rational as one pleases to look upon it. A short time ago 
it located makers of clothing nearly at the foot of the ladder in sweat¬ 
shop conditions. To-day they are in the upper group of skilled 
crafts and, if the industry were not still to a considerable extent sea¬ 
sonal, would be as well paid as clerical work and as public school 
teacher or postoffice employee. Should it, then, be said that in the 
public interest further improvement in standard of living for this 
group was not justified ? 

The Board held that there is as yet no clear standard in our social 
order for assigning a relative position to any group of workers and that 
so far as the public interest is concerned, it would not be justified in 
singling out the clothing workers for an accounting unless data were 
also available for every stage in the process of production and market¬ 
ing, and unless the test of fair profits as well as fair wages were to be 
made. In the absence of such data the Board held therefore that the 
workmen in this industry were entitled to take advantage of the 
increased demand for their product and their labor and to receive an 
increased wage. 

For experience with trade agreements in the clothing industry 
see Selection 8(6), chapter xxi, Part Five. 



METHODS OF SECURING INDUSTRIAL PEACE 


913 


4. PROPOSED NATIONAL SYSTEM FOR ADJUSTING 

INDUSTRIAL DISPUTES 1 

The second Industrial Conference called by President Wilson 
made public its final report March 20, 1920, in which it recommended 
joint organization of employers and workers as the most promising 
method of attacking problems arising from the relationships in 
industry. The system of settlement recommended by the confer¬ 
ence consists of a National Industrial Board, local regional conferences 
and boards of inquiry to be established by the President and Congress 
as follows: 

1. The parties to the dispute may voluntarily submit their differences for 
settlement to a board, known as a Regional Adjustment Conference. 

This board consists of four representatives selected by the parties, and 
four others in their industry chosen by them and familiar with their 
problems. The board is presided over by a trained government official, 
the regional chairman, who acts as a conciliator. If a unanimous agree¬ 
ment is reached, it results in a collective bargain having the same effect 
as if reached by joint organization in the shop. 

2. If the Regional Conference fails to agree unanimously, the matter, with 
certain restrictions, goes, under the agreement of submission, to the 
National Industrial Board, unless the parties prefer the decision of an 
umpire selected by them. 

3. The voluntary submission to a Regional Adjustment Conference carries 
with it an agreement by both parties that there shall be no interference 
with production pending the processess of adjustment. 

4. If the parties, or either of them, refuse voluntarily to submit the dispute 
to the processes of the plan of adjustment, a Regional Board of Inquiry 2 
is formed by the regional chairman, of two employers and two employees 
from the industry, and not parties to the dispute. This Board has the 
right, under proper safeguards, to subpoena witnesses and records, and 
the duty to publish its findings as a guide to public opinion. Either of 
the parties at conflict may join the Board of Inquiry on giving an under¬ 
taking that, so far as its side is concerned, it will agree to submit its 
contention to a Regional Adjustment Conference, and, if both join, a 
Regional Adjustment Conference is automatically created. 

5. The National Industrial Board in Washington has general oversight of 
the working of the plan. 

6. The plan is applicable also to public utilities, but in such cases, the govern¬ 
ment agency having power to regulate the service has two representatives 

1 Adapted with permission from an article by Willard E. Atkins in the Journal 
of Political Economy , XXVIII (May, 1920), 5. 

2 A board of inquiry only, not of arbitration. 


914 


THE WORKER IN MODERN ECONOMIC SOCIETY 


in the Adjustment Conference. Provision is made for prompt report of 
its findings to the rate-regulating body. 

7. The plan provides machinery for prompt and fair adjustment of wages 
and working conditions of government employees. It is especially neces¬ 
sary for this class of employees, who should not be permitted to strike. 

8. The plan involves no penalties other than those imposed by public opinion. 
It does not impose compulsory arbitration. It does not deny the right to 
strike. It does not submit to arbitration the policy of the “closed” or 
“open” shop. 

Naturally a plan which employs no legal authority except the 
right of inquiry will fail to satisfy those who want a showdown between 
labor and capital. But these groups may safely be left out of con¬ 
sideration in the discussion of the merits of the plan. 

The plan frankly takes its position in the middle of the road. It 
doesn’t leave the situation with the confidence of the Commercial and 
Financial Chronicle that “employers and employees are steadily 
coming together of themselves and by themselves,” and hence “take 
off the meddling hands and keep them off,” although that attitude 
always has many supporters. It does not adopt the idea of deciding, 
if necessary, the questions at issue for the parties and placing all who 
will not be reconciled in jail, whether there are enough jails to hold 
them or not. The strike, the lockout, picketing, boycotting, black¬ 
listing—none of these are prohibited. No distinction is made between 
union and non-union men. Nor is there any effort to force the accept¬ 
ance of any findings upon either party to the conflict. Legal compul¬ 
sion is absent. The conference suggests machinery merely to get the 
parties together, exercising no physical compulsion or obedience to 
any opinions, findings, or agreements, but relying upon wisdom, or at 
least a settlement, to come out of discussion, with no sanction pushing 
the parties to agreement other than that arising out of public opinion 
which will have an opportunity to read the facts. 

Inasmuch as the voluntary principle dominates the plan the 
parties must be induced to bring their case before the machinery sug¬ 
gested. This is evident. And the conference has worked out a most 
commendable method to gain this end. Since nothing but a unanimous 
agreement of the representatives of the workers and employers binds 
either party to the dispute, there is little to be lost by either party in 
submitting disputes to the tribunals created, and once submitted the 
purpose of the conference is accomplished; the parties are brought 
together. If one side submits its case, it seems reasonable that the 


METHODS OF SECURING INDUSTRIAL PEACE 


915 


other will join, for, although there is no penalty, the party which 
refuses will have to justify its course before the public, oftentimes a 
difficult task. 

Whether the ease with which an appeal can be made to govern¬ 
mental machinery will undermine collective bargaining of the custom- 
ary type, is a question. It would seem desirable that as many con¬ 
flicts be settled outside as possible; but it is a question if employers and 
unions are as likely to reach an agreement among themselves when 
both parties are conscious at all times of the ability to appeal. May 
not a host of trivial questions be brought before the machinery cre¬ 
ated which otherwise would be settled outside? The answer to the 
question depends, probably, upon the type of men who constitute the 
boards, and the skill, foresight, and wisdom of those who guide the 
plan nationally. No one can study the problem of conciliation and 
trade agreements without a profound respect for the play of personali¬ 
ties; oftentimes both the mode and terms of the settlement are as 
much a question of men as of machinery, or the particular wrongs, 
actual or imagined, of which the parties complain. Given a man in 
control like ex-Commissioner Neill, who will estimate lightly the 
possibilities of even this imperfect instrument projecting a wholesome 
influence at the table where capital and labor meet in daily parley ? 
Perhaps in practice there will be a growing reluctance to let the matter 
pass into the hands of the government; certainly acquaintance and 
settlement of the first and then the second dispute will build within 
the two a strong tradition against appealing to the regional con¬ 
ferences. 

To many the plan will appear commonplace, incomplete. Before 
the machinery provided begins to function, it is necessary for matters 
to come to a crisis. There is no provision for handling causes which 
may lead up to difficulty. It deals with effects; seeks solely to get 
the parties together for one last effort to find out if their differences are 
real or imaginary. Moreover, disputes may arise because of matters 
lying beyond the competence of either of the two parties. Who will 
say that the cost of living may not be the particularly irritating factor 
in any dispute? Yet the organization suggested is not in any way 
to study the fact, to make recommendations regarding legislation, or 
in any way to investigate the industrial unrest; it is limited to pre¬ 
venting unrest from uttering itself in interrupted production. A grant 
of power to recommend legislation to Congress which will remove 
irritating factors making for industrial warfare, much like the grant 


gi6 THE WORKER IN MODERN ECONOMIC SOCIETY 


of power now commonly given to public utility and minimum-wage 
commissions, would seem to be a desirable addition to the plan. 

5. A PROPOSAL FOR THE REORGANIZATION OF 

THE RAILWAY INDUSTRY 1 

# 

[Note. —From time to time projects arise for changing the existing 
system of control in industry. The following widely advertised 
proposal presents one concrete plan of this sort for a basic American 
industry.— Ed.] 

Who has endorsed it? 

The two million organized railroad employees of America; and 
the American Federation of Labor, approving the principle of govern¬ 
ment ownership, has instructed its executive committee to co-operate 
with the officers of the railroad internationals in their effort. It also 
has been endorsed by several farmer’s organizations. 

How does it propose to buy the roads ? 

By issuing government bonds with which to pay for the legitimate 
private interests in the railroad industry. 

How does it propose to operate the roads ? 

By a board of fifteen directors, five named by the president, to 
represent the public; five elected by the operating officers; five 
elected by the classified employees. 

Does this mean government operation ? 

No, it is operation by a board in which those having the responsi¬ 
bility have also the authority. It is superior to government operation 
because it prevents control by an inefficient bureaucracy; and is 
true democracy since it gives the men engaged in the industry a voice 
in its management. 

What becomes of the surplus ? 

After operating expenses are paid, and fixed charges are met, 
including the interest on outstanding government securities, the 
surplus is divided equally between the government and the men. 
The employee’s portion is to be divided between the managerial and 
classified employees, the former receiving double the rate received by 
the latter class. This is not a profit, since the corporation has no 
capital. What the men receive is a dividend on efficiency. 

1 Taken with permission from The ABC of the Plumb Plan , The Plumb Plan 
League (Washington, D.C.). 


METHODS OF SECURING INDUSTRIAL PEACE 


917 


Is this a bonus system ? 

No, it is giving those who increase production a share of the 
results their increased effort has produced; and this share is theirs 
for as long as they are actually in the service, and is not forfeitable. 

Why do operating officials receive the larger rate of dividend? 

Because it serves as a greater stimulus to the group with the most 
responsibility. And since the operating officials would lose dividends 
if wages were increased it acts automatically to prevent collusion 
between labor directors and the operating directors to outvote the 
public’s directors in raising wages beyond a reasonable level. The 
chief argument against the plan is that the public loses control of 
its own property, and that the men in charge cannot be prevented 
from combining to pay themselves extortionate wages. This method 
of sharing dividends sets up a natural barrier against collusion. 

Is this the only protection for the public ? 

No, the rate-making power remains with the Interstate Commerce 
Commission, and if wages were raised so high that rates had to be 
increased, the Commission could refuse to change them, and shippers 
might appeal to the courts for redress. If the operation by the 
directors results in a deficit Congress can revoke their charter. 

Does this difference in dividends create hostility between officials and men ? 

No, because without harmony between them neither group can 
earn dividends. An official in working for his own dividend is working 
for the dividend of his subordinates, for one cannot gain unless all gain. 

Does a plan assure a decrease in rates ? 

It provides that when the government’s share of the surplus is 
5 per cent or more of the gross operating revenue, rates shall be 
reduced accordingly to absorb the amount the government receives. 
For instance: If the entire surplus one year is $500,000,000, and this 
is 10 per cent of the gross operating revenue, the government receives 
$250,000,000. And because this is 5 per cent, rates are decreased 5 
per cent. See what follows. Without new economies or new business 
the profits the next year would be only $250,000,000, and the employees 
and the government would receive only half the amount of the year 
before. But decreased rates mean more business; and also, the reduc¬ 
tion in dividends would stimulate the employees to improve their 
operation by applying better methods. So the tendency is to assure 
constantly decreasing rates, to add to the volume of business, and to give 
the most efficient service human ingenuity and devotion can provide. 


918 THE WORKER IN MODERN ECONOMIC SOCIETY 


Decreased rates mean cheaper commodities; and so, through the 
effectiveness of the railroads, the purchasing power of the money is 
increased, not only for the railroad man, but for every wage earner 
and every purchaser. 

What does the government do with its share of the surplus ? 

It invests it in improvements and extensions, thus adding to the 
value of the railroads without adding to the fixed charges. It retires 
the outstanding bonds, thus reducing the fixed charges. Ultimately 
the public has its railroad service at cost. 

Does the government pay for all extensions ? 

No, the community benefited must pay if it can; if it is able to 
pay all, the building of the extension is obligatory. If it only pays 
part, the government pays the remainder, but only makes the exten¬ 
sion as it deems wise. And where the general public and not a local 
community would be benefited, the government pays the whole bill. 

How are disputes between officials and men adjusted ? 

By boards, to which the operating officials elect five members 
and the men, five members. In case of failure to reach an adjustment, 
the case is appealed to the directors. 

Who determines the rate of wages ? 

The board of directors. 

Who supervises the purchase of the roads ? 

A Purchasing Board, composed of the Interstate Commerce 
Commission and three directors of the new government corporation, 
one director from each group. 

Who decides the value of the private interest in the railroads? 

The courts. It is a judicial question, and is to be answered only 
after an examination of the charters of the existing companies, the 
laws under which they are created, and the manner in which the 
company has lived up to its charter and these laws. 

Will the public have to pay for watered stock ? 

No. The public will probably pay less than two-thirds of what 
the railroads claim as their value. 

Are there other savings ? 

Yes, the public can/obtain the money to purchase the lines at 4 
per cent, whereas the public is now charged rates to guarantee the 
roads 6\ per cent on their money. The saving on the present capital 


METHODS OF SECURING INDUSTRIAL PEACE 


919 


account of the railroads would be about $400,000,000, and on an 
honest valuation would be nearly twice this sum. The Plumb Plan 
provides for a sinking fund, and every year one of the fixed charges 
would be 1 per cent of the outstanding indebtedness, to be used in 
retiring the bonds. The government also uses its profit in retiring 
bonds, so eventually, probably in fifty years, the people would own 
the roads debt-free. A further saving would be in the operation of 
the roads as a unified system, which permits the interchange of equip¬ 
ment, the end of wasteful competition, and greater economy in buying 
supplies. Under this plan passenger rates of i§ cents a mile and a 
reduction of freight rates by 40 per cent appear reasonable. 


See also the material of chapter xxiii, Labor in Politics. 

PROBLEMS 

1. Distinguish between the terms conciliation, mediation, voluntary and 
compulsory arbitration. 

2. Does compulsory arbitration make the use of conciliation impossible? 

3. “ Compulsory arbitration means that freedom of contract in industrial 
matters no longer exists.” Comment. 

4. “If compulsory arbitration is to succeed in preventing strikes, it must 

first of all create conditions under which strikes are unlikely to occur.” 
(a) What, in the opinion of Mr. Hammond, are these conditions ? ( b ) 

To what extent have they obtained in Australia? (c) Do you think 
that under the present organization of industrial society they can be 
made permanent ? 

5. “It seems questionable whether those parts of the laws which prohibit 
strikes, when no really effective mode of enforcing exists, are likely to 
persist.” Comment. 

6. What theories, if any, seem to underlie the Canadian Act ? Disputes 
Investigation Act ? 

7. “A false step, reactionary, un-American” (Samuel Gompers). “The 
wisest and most successful legislation anywhere adopted” (Chas. W. 
Eliot). With which statement do you agree? 

8. What is the method of procedure under the Canadian Act ? 

9. “The Canadian Act is obeyed not because employees fear imprisonment 
but because they do not wish to seem law-breakers.” Comment. 

10. What is the doctrine of public interest as expressed in the act creating 
the Kansas Court of Industrial Relations ? 
n. Is a court composed of three men appointed by the Governor necessarily 
representative of all the people ? Why or why not ? What might the 
worker think ? What alternative form of tribunal could you suggest ? 



920 


THE WORKER IN MODERN ECONOMIC SOCIETY 


12. Under the Kansas Act can there be validly punished: ( a ) A concerted 

but peaceful walk-out of 11,800 out of 12,000 employees in protest 
against the imprisonment of one of their leaders for violation of an 
injunction ? ( b ) A peaceful cessation of work by employees in an overall 

factory who are dissatisfied with an order fixing their wages? (c) 
The shutting-down of flour mills by the owners because operations if 
continued would cut down the customary margin of profit ? ( d ) The 

closing of a particular flour mill by the owner because compliance with 
an order from the court will not enable him to earn as large a return on 
his capital as he can get by transferring the business to the state of 
Missouri? If valid to punish, how desirable? 

13. What is meant by the remark that the worker gives up all when he 
gives up the right to strike ? Is it true ? 

14. Do you agree with the principle of the Kansas Industrial Court that what 
constitutes a right and proper wage can be determined by a court? 
Why or why not ? 

15. Prior to the passing of the interstate commerce act of 1887 workers 
favored compulsory arbitration and railroad executives commonly were 
opposed to it. At the present time railroad executives rather commonly 
favor compulsory arbitration and the workers are opposed to it. How 
do you account for the complete change in attitudes which has occurred ? 

16. The history of the use of federal power in railway labor disputes may be 
divided into six stages marked by (a) the law of 1888, ( b ) the Erdman 
Act of 1898, ( c ) the Newlands Act of 1913, (d) the Adamson Law passed 
in 1916, ( e) the period of war administration of railroads, and (f) the 
Transportation Act of 1920; Esch-Cummins Law. Trace the course 
of events leading up to each one of these stages. 

17. In what sense does the Transportation Act of 1920 mark a departure in 
the means used to adjust labor disputes ? 

18. “ Slowly Congress has assumed a position with regard to railway labor 
disputes which the logic of the situation demanded and from which the 
people will not allow it to recede.” What is this position? Do you 
agree that it is in accord with the logic of the situation ? 

19. If you were a member of one of the “Big Four” Brotherhoods would you 
favor the settlement of labor disputes through the Railroad Labor 
Board or through direct negotiation ? Would your answer be the same 
if you were a member of a barely existing maintenance-of-way group ? 

20. Describe the present United States Railway Labor Board in terms of 
(a) personnel, ( b ) methods of procedure, (c) sanctions. 

21. Examine the plan for adjusting industrial disputes which was submitted 
by the Industrial Conference called by Woodrow Wilson. What are 
its outstanding provisions? Why does “the voluntary principle” 

• dominate the whole ? 


METHODS OF SECURING INDUSTRIAL PEACE 


921 


22. Why should a grant of power to recommend legislation be given to the 
National Industrial Board which the plan sets up ? 

23. “Presumably the community is not only interested in correcting the 
abuses of the existing order of things and promoting industrial peace 
but it is interested in seeing that industry is conducted upon a basis that 
will bring the maximum of returns to all parties concerned. A study of 
community action should include a study of the possibilities of socialism, 
of communism, of syndicalism, and the many varieties of methods 
whereby men might work together.” Discuss. 

24. “Not least among the problems that face the community is the ques¬ 
tion of incentives to production.” Do you agree ? How would you 
proceed if you were to take up a study of incentives to production ? 

25. “Candid examination of the facts of industry may well reveal the need 
of a new economic commonwealth growing up and regulating itself 
apart from the political state.” Do you see any evidence of the begin¬ 
nings of an economic commonwealth in any part of modern industry ? 

26. “The possibilities of professionalizing work have not yet been appre¬ 
ciated.” What causes work to become professionalized? Can the 
state assist in the process ? 

27. “The community is much concerned with industrial peace and with the 
thousand and one piece-meal bits of regulation but when it comes 
to questions which challenge the fundamentals of the existing order it 
refuses to think or act.” Discuss. 

28. “Building a Code of Law in the Clothing Industry.” Discuss the 
validity of this title. If such agreements as exist in parts of the men’s 
clothing industry were common to all industry would the necessity of 
state action exist ? 

29 To what extent are the interests of the public cared for by collective 
agreements between employers and employees? Are the interests of 
employers, employees, and the public the same ? 

30. “Certain problems of industrial life suggest that what is needed is 
complete reorganization of the fundamentals of modern industry.” 
Discuss. 

REFERENCES FOR FURTHER READING 

American Labor Legislation Review 

Atkins, Willard E., “The Kansas Court of Industrial Relations,” Journal 
of Political Economy , XXVIII, 339-52 

Barnett, G. E., and McCabe, D. A., Mediation, Investigation and Arbitra¬ 
tion in Industrial Disputes 

Clark, J. M., “The Basis of War-time Collectivism,” American Economic 
Review (December, 1917), pp. 772-90 

Clark, L. D., “Minimum Wage Laws in the United States,” Monthly Labor 
Review, XII (March, 1921), 1-20 


922 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Clark, V. S., The Labor Movement in Australasia 
Cole, G. D. H., Social Theory 
-, Self Government in Industry 

Collier, P. S., Minimum Wage Legislation in Australasia , fourth report, 
New York State Factory Investigating Commission, Volume 4, 
pp. 1846-2280 

Commons, J. R., and Andrews, J. B., Principles of Labor Legislation, Revised 
edition, 1920 

Commons, J. R. (Ed.), Trade Unionism and Labor Problems, 2d Series, 
Part V 

Cook, W. W., “Privileges of Labor Unions in the Struggle for Life,” Yale 
Law Journal, XXVII (April, 1918), 779 
Duguit, Leon, Law in the Modern State 

Frankfurter, Felix, “Hours of Labor and Realism in Constitutional Laws,” 
Harvard Law Review, XXIX (1916), 353-73 
Higgins, H. B., “A New Province for Law and Order,” Harvard Law Review , 
XXIX (1915), 13-39 

Hobson, J. A., Incentives in the New Industrial Order 

Montgomery, Royal E., “The Clayton Law Labor Provisions and the 
Supreme Court,” Journal of Political Economy (February, 1923), 1-32 
Pound, Roscoe, “Liberty of Contract,” Yale Law Journal, XVIII (1909), 
454-87 

-, The Spirit of the Common Law 

Powell, T. R., “Collective Bargaining before the Supreme Court,” Political 
Science Quarterly , XXXIII (1918), 396-429 
Report to the British Minister of Labour of the Committee of Enquiry into the 
Working and Effects of the Trade Board Acts, April 1922 
Sayre, F. B., Cases in Labor Law 
Spencer, W. H., Law and Business, Vol. Ill 

Suffern, A. E., Conciliation and Arbitration in the Coal Industry of America 
Tawney, R. H., The Acquisitive Society 

United States Bureau of Labor Statistics, Bulletins 60, 62, 98, 124, 133, 
i9L 303 

United States Commission on Industrial Relations, Final Report, 1916 
Webb, Sidney, and Webb, Beatrice, Industrial Democracy, 1920 
-, A Constitution for the Socialist Commonwealth of Great Britain 





INDEX 



Q 


INDEX 


Accident, insurance, 421; administration 
of, 424; see also Workmen’s Compen¬ 
sation 

Accidents: common law of, 412; 
consequences of, 407; distribution of 
injuries, 402; duration, 403; extent, 
401; fatal industrial, 402; and 
fatigue, 407; insurance systems, 
421; prevention of, 428; and viola¬ 
tion of rules, 411; and wages, 404; 
see also Workmen’s Compensation 

Amalgamated Clothing Workers, 554; 
agreement in the clothing industry, 
673 

American Federation of Labor, Part 
Five; general nature, 549; structure, 
55i 

American Heritage, 150 

Apprenticeship, 657; an appraisal of 
early, 91 

Arbitration, by mutual agreement, 906; 
see also Compulsory Arbitration 

Australian Arbitration Act, 890 

Boot and Shoe Industry, development 
of, 167 

Boycott: Danbury Hatters case, 646; 
definition and classification, 643; legal 
aspects, 648, 876; methods, 645; 
origins in the United States, 642 

British Labor Party, 706, 710 

Business cycles and labor policies, 720; 
and wages, 230, chapter ix, section c 

Canonists, economic theories of, 95 

Capital, early lack in America, 163; 
and “Labor,” meaning of terms, 132 

Capitalism, coming of, chapters v-vi 

Capitalistic spirit, in America, 154 

Chartism, 706 

Child labor: Federal law of 1916, 822; 
of 1919, 823; geographical distribu¬ 
tion, 822; and legislation, 819; 
occupations of, 821 

Citizenship and hours, 351 

Classes: differentiation of, 103; eco¬ 
nomic, in the United States, 176; 
see also Specialization and Occupa¬ 
tional Groups 

Clayton Act, and its interpretation, 874 


Cleveland Guaranty Plan, of employ¬ 
ment, 515 

Closed shop, defined, 601; ethics of, 
611; terminology, 603 

Collective bargaining, 524; chapters 
xx-xxi; agreements in the stove 
industry, 668, in the clothing in¬ 
dustry, 673; legal aspects, chapter 
xxviii 

Collectivism, and individualism, 140, 
802 

Commercial revolution and population, 
126 

Companies Act, British, 134 

Communication, influence of, 120, 158 

Communist Manifesto, 102 

Community, and social control, Part 
Seven 

Compact, theory of social, 156 

Compulsory arbitration, in Australia, 
887; and strikes, 891 

Compulsory investigation, the Canadian 
Act, 897 

Convict, the Siberian, 80 

Consumers’ League, campaign against 
low wages, 809 

Consumers’ Co-operation: economic 
aspects of, 687; future of, 697; 
history and principles of, 681; in 
the United States, 692; on the 
Continent, 689; methods, 683; place 
of the wholesaler, 686; position of 
the employees, 694 

Co-operation, see Consumers’ Co-opera¬ 
tion 

Cop page v. Kansas , case of, 877 

Corporation: development of, 134; in 
the United States (tables), 186 

Cost of living: budgetary studies of, 
286; changes in, 287; of various 
standards, 274; in wage adjustment, 
266; in war time, 263; for working 
women, 325, 345 

Courts and organized labor, chapter 
xxviii 

Craft gilds, 89; break up of, 101 

Craftsmanship: in the Greek State, 79; 
in medieval England, 89 

Cultural lag, and progress, 811 


925 


926 


THE WORKER IN MODERN ECONOMIC SOCIETY 


Disease: prevalence of, 436; responsi¬ 
bility for, 440 

Domestic system: in Boot and Shoe 
Industry, 168; in England, 106 

Economic man, theory of, 4 
Economic structure, changes in, 161 

Eight-hour day: basic as contrasted 
with actual, 350; degree achieved, 
348; see also Hours 

Employers’approach, Part Six; associa¬ 
tions, chapter xxiv 

Employment exchanges, system of, 504 
Emulation, types of, 31 
Enclosure movement, 102 
Energy, sources of human, 24 

“Equal pay for equal work,” as wage 
theory, 341 

Evolution: meaning of human, 14; 
see also Science 

Factory legislation, 139; chapter xxvii 
Factory system, coming of, 105 

Family, variations in size and composi¬ 
tion, 288 

Farm: changes in size and tenure in 
the United States (tables), 187; 
population, changes in, 176 

Farmer-Labor Party, 730 
Fatigue, mental aspects of, 26; and 
human energy, 24; see also Hours 

Fear: breeds warfare, 395; imminence 
of, 392 

Federations of labor, city federations, 
586 

Feudal society, 95 

Folkways, 30; see also Mores and Habit 

Free land: disappearance of, 142; 
influence of, 151; influence on union¬ 
ism, 533 

Frontier, American, influence of, 150 

Gainfully employed, in the United 
States (tabular classifications), 182 

Gilds, break-up of, 101 
Government, province of, 802 
Great Society, 7 
Greek Artisan, 77 

Habit: accumulative, 131; and con¬ 
duct, 11; function of, 29; in social 
life, 29 


Handicraft stage: of industry, 89; 
in Boot and Shoe Industry, 168 

Hand-loom weaver, 121 

Health and fatigue, 442; see also 
Health Insurance 

Health insurance: arguments against, 
446; compulsory, 451; in Great 
Britain, 452; and medical aid, 445; 
and prevention, 449 

Herd tendencies, in industry, 33, 58 

Hitchman Coal and Coke Co. v. Mitchell , 
case of, 882 

Holden v. Hardy , case of, 835 

Hour legislation: basis for, 840; Holden 
v. Hardy, 835; legal arguments for, 
829; Lochner v. N.Y., 829; Oregon 
ten-hour case, 838; see also Hours 

Hours: and citizenship, 351; English 
experience, 358; experiments in 
battle-ship building, 357; legislation 
for men, 829; in the coal industry, 
chapter xii; in manufacturing, 348; 
in the Middle Ages, 91; in mining, 
350; in transportation, 350; normal 
working day, 600; and production, 
357; and unemployment, 356, 497; 
and wages, 353 

Human behavior: in terms of wish- 
fulfilment, 53; study of, 13 

Human nature, Part I; as product of 
training and environment, 64; and 
evolution, 7; theories of, 52 

Immigration: and the capitalist spirit, 
154; character of recent (tables), 
189; and the labor market, £32 

Incas, social organization of, 85 

Incentives, see Motives 

Income: amount in the United States, 
294; among economic classes, 297; 
compared with other countries, 296; 
distinction between wealth and, 290; 
distribution in England, 292; per 
capita, 295 

Individual bargaining, 226; see also 
Collective Bargaining 

Individual differences, 44; in attention, 
47; in intelligence, 45, 49; in motor 
capacity, 46; in rate of perception, 46 

Individualism, 140, 802; in United 
States, 143; and the frontier, 152; 
see also Collectivism 

Industrial combinations, 132, 167 

(tables), 184 

Industrial Revolution, chapters v-vi 


INDEX 


927 


Industrial Workers of the World, 555 

Industry: development in United 

States, 158; industrial combinations 
(tables), 184; industrial revolution, 
99 

Injunction, nature of, 653; proper 
bounds for use of, 655 

Insecurity, see Risk 

Instincts, 53, 59, 65, Part One; classifi¬ 
cation of, 60; and economic activity, 
10; herd instinct, 33, 58 

Institutions: and social change, 17; 
persistence of, 68 

Insurance: accident, 421; old age, 466; 
sickness, 433; social, Part Four; trade 
union, 667; unemployment, 507 

Intelligence: tests of, 48; and tools, 19 

Inventions: and social change, 17, 811; 
influence of mechanical, 108 

Irregular employment, in the coal 
industry, 370, 377; see also Unem¬ 
ployment 

Ives v South Buffalo Railroad Co., 
case of, 415 

Judgment, nature of, 36 

Jurisdictional disputes, 660 

Just price, 94, 204, 231 

Kansas Court of Industrial Relations, 
893 

Knights of Labor, 538 

Label, see Unions 

Labor and “Capital”: meaning of 
terms, 132; reserve of, 492; “and 
the New Social Order,” 711 

Labor Cost: and wages, 215; in relation 
to prices and profits in coal industry, 
368 

Labor parties, chapter xxiii; see also 
Political Action 

Laissez faire: based on theory of 
economic man, 5; modification of, 
142, Part Seven; reign of, 136 

Law: and social change, 813; and 
trade unionism, chapter xxviii; pro¬ 
tective legislation, chapter xxvii 

Limited liability, 134 

Lochner v. N.Y., case of, 829 

Machine: influence of, 112; the “iron 
man,” 115; and wages, 228 

Machinery, changes in Boot and Shoe 
Industry, 172 


“Make-work” argument, as to hours, 
356 

Malthus, T. R., theory of population, 
i37 

Man: evolution of, 15; prehistoric, 19 

Marginal productivity, theory of wages, 
249, 256 

Market: worker’s relation to, Part 
Three; higgling of, 222; and immi¬ 
gration, 232; meaning of inter¬ 
national, 129; world, 103 

Methods of Wage Payment, 212, 
chapter xxv 

Middle Ages, industry in, 89 

Minimum wage: District of Columbia 
case, 864; effect on wages, 854; 
history in United States, 845; in 
war time, 263; legality of, 862; 
Massachusetts and Oregon principles, 
846; and parasitism, 843; recom¬ 
mendations for, 852; and unemploy¬ 
ment, 842; in Canada, 854 

Monotony, and variety, 47 
Mores, 30; see also Habit 
Motives, 4, 12, 24, 31, 42, chapter iii; 
in the Greek state, 77; in the handi¬ 
craft period, 90; in the Inca state, 
85; in Siberia, 80; under slavery, 83; 
see also Human Nature 

Nature: natural law, 141; state of, in 
American political theory, 155; sys¬ 
tem of natural liberty, 137 

Negro population, 188 
Non-partisan League, 732 

Occupational disease, causes of, 435 

Occupational groups, English, 127; 
modern American, 175; see also 
Classes and Specialization 
Old age: cost of indifference to, 463; 

and modern industry, 465 
Old age pensions, objections to, 469 
Open shop, 601 

Personality, 53; see also Human Nature 
Picketing, 627; and violence, 635 
“Pin-money” theory of wages, 329 
Plumb Plan, 916 

Political action: British Labor in 
politics, 706; and the business cycle, 
720; early American labor parties, 
719; Farmer-Labor Party, 730; 
Non-Partisan League, 732; and the 


928 THE WORKER IN MODERN ECONOMIC SOCIETY 


socialist movement, 725; reconstruc¬ 
tion program of British Labor Party, 
711 

Political ideas, American, 155 

Population: American, 175; of England 
in 1688 and 1769, no; in England 
and Wales, 112; in manufacturing 
areas, 1851-1901, in; urban English, 
127; of states, 162 

Poverty: in America, 277; in England, 
274; effects of, 317; old age, 460; 
primary and secondary, 275 
Production, and hours, 357 
Productive efficiency, as a wage stand¬ 
ard, 264 

Profit-sharing, chapter xxv 

Psychology, scope of, 13 

Public works, and unemployment, 501 

Railway Labor Board, 901 
Railway Brotherhoods, 552 
Rationalization, 42 
Rational thought, function of, 36 
Residual claimant theory of wages, 247 
Response, stimulus and, 13 
Restriction of output, 662 
Risks: of worker, Part Four; classifica¬ 
tion of, 395 

Science: development of scientific 

thought, 100; influence on social 
ideas, 143 

Security: of life, 388; through expanded 
production, 389; through science, 
39i 

Shop Committee, chapter xxiv 

Six-hour day, and five-day week in the 
coal industry, 370, 377 
Skill, attempts to define, 219; and the 
machine, 112 

Slavery: in the United States, 83; 

in the Greek state, 78 
Smith, Adam: influence of, 137; view 
of human nature, 5 

Social ideas: American, 140; change 
in, 136; influence of science on, 142; 
Part Seven 

Socialism, 725 (also chapters xxiii and 
xxvi) 

Specialization, in Boot and Shoe 
Industry, 173; chapters v and vi 

Standardization, 117, 119 


Standard of living, 272 (chapter ix); 
and wages, 210 

Standard rate, 595 

State action: growth of, 139; scope of, 
141; Part Seven 

Status: in relation to just price, 94; 
partial maintenance of, 208 

Steel industry: development of, 164; 
hours of labor in, 351 

Stimulus and response, 13, 53 

Strike: definition and nature, 612; 
degree of loss from, 620; history in 
the United States, 613; legal aspects, 
624; policy of Knights of Labor, 545 

Subsistence theory of wages, 239 

Tools, social influence of, 18 

Towns: growth of, 126; in the nine¬ 
teenth century, 124; in the United 
States, 183 

Trade Boards Act, British, 855 

Trade Unions, see Unions 

Tradition, in social life, 30 

Transportation: influence in United 
States, 158 

Unemployment: and the business cycle, 
479; causes, 491; in the coal industry, 
chapter xii; controlling, 500; and 
credit, 498; definition, 472; fluctua¬ 
tions, 1902-17, 472; and hours, 356; 
and immigration, 499; in Massachu¬ 
setts, New York, and Wisconsin, 475; 
and the reserve of labor, 492; seasonal 
and intermittent, 480; social effects, 
486; and trade unions, 489 

Unemployment insurance, 507; the 
Cleveland guaranty plan, 515; diffi¬ 
culties, 514; in Great Britain, 508 

Unions: Amalgamation of related 

trades, 579; craft v. industrial, 530; 
functional classification of, 527; his¬ 
tory in the United States, 532, 562; 
insurance, 667; label, 544, 640; 

legal status, chapter xxviii; policies 
and methods, 594; psychological basis 
for, 35; reasons for existence, 210, 
524; structure and organization, 568; 
tenure and promotion rules, 661; 
ultimate aims of, 576; workshop as 
local, 585; world-growth of, 564 

United Mine Workers of America et al. v. 
Coronado Coal Co. et al., case of, 879 

Urbanization: psychological aspects of, 
11; in the United States (tables), 183 


INDEX 


929 


Variety, and monotony, 47 

Violence in the labor movement, 629 

Voluntary association, growth of, 139; 
see also Unions and Employers 

Wage adjustment: standards of, 258; 
in war time, 262; see also Wages 
and Wage Theory 

Wage-fund theory, 241 

Wages: before 1915, 298; in the coal 
industry, 365; economy of high, 216; 
effects of low, 317; differentials, 265; 
of heads of families, 298; of immi¬ 
grants, 299; methods of payment, 
212, chapter xxv; origin of system 
of, 203; and productivity, 313; 
real wages, 214, 307; relative sta¬ 
bility, 209, 231; since 1915, 300; 
standard rate, 595; wage rates, 307; 
weekly earnings, 301, 310, 333; of 


women, chapter x: yearly earnings, 
298, 300, 304, 313 

Wage theory, 238 (chapter viii) 

Wealth: distinction from income, 290; 
distribution in different countries, 
291; in Massachusetts, 292; in¬ 
equality of, 294 

Will, fatigue of human, 26 

Wish-fulfilment, in human behavior, 53 

Women: cost of living and dependents, 
342; hour legislation for, 826; 
number employed, 182, 324; and 
protective laws, 825; and wages, 326 

Worker’s approach to his problems, 522 

Workmen’s Compensation: Ives v. 
South Buffalo Railroad Co., 415; 
provisions of laws, 417; short¬ 
comings of, 427; see also Accidents 
and Insurance 


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